Pool Re completes £2.475 billion terrorism retrocession placement

Julian-Enoizi,-Pool-Re-CEO

Pool Re, Britain’s leading terrorism reinsurer, has completed placement of its three year £2.475 billion retrocession programme with 56 international reinsurers. The placement is led by Munich Re with Hannover Re and Fidelis among those providing significant capacity.

Reflecting the underlying insurance provided by Pool Re through its member insurers, the retrocession covers property damage arising from nuclear, biological, chemical, and radiological attacks (CBRN); those arising from cyber-triggered terrorist losses; as well as conventional terrorist acts.

The retrocession is structured as an aggregate excess of loss treaty which will respond if Pool Re’s losses, individually or in aggregate, exceed £400 million in any year, after member insurers’ combined retention of £250 million per event or £420 million in aggregate. The £2.475 billion is an increase from £2.4 billion in 2019 and includes £75 million provided under Pool Re’s existing ground-breaking terrorism catastrophe bond.

Steve Coates, Pool Re’s chief underwriting officer, said: “Despite a difficult market we were delighted to achieve flat pricing for this important placement.  Through our Solutions offering, Pool Re has invested significantly in data and analytics over recent years with a focus on modelling of CBRN risks, which is particularly relevant in light of the pandemic. Reinsurers know that we have a strong focus on risk management through our research, and combined with their view of the terrorism market as a sensible diversification away from pure natural catastrophe risk, this means that we were able to engage with a number of new markets and achieve a very positive result.”

Kevin Fisher, chairman of UK, specialties and North America at Guy Carpenter, commented: “Pool Re has achieved wide support in sourcing capacity for its retrocession programme, with coverage being provided by existing and new markets.  Their technical expertise and emphasis on data analysis contributes to strong relationships across the market and Guy Carpenter is pleased to have worked with Pool Re to achieve this excellent result.”

Julian Enoizi, Pool Re chief executive, said: “A core part of our strategy is to further distance the taxpayer from potential loss and we continue to look for creative and innovative ways to achieve that.  Pool Re’s extended retrocession placement is one of the largest reinsurance deals in the world and we have sought to increase the amount we place every year since 2015 as part of our intention to return UK terrorism risk to commercial markets. We are delighted with the outcome for this new three-year placement.”

Graph below shows the structure of Pool Re's retrocession programme:

 

Authored by Pool Re

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