The Australian Reinsurance Pool Corporation (ARPC), the Australian government’s terrorism reinsurance agency, has announced that it has secured a larger retrocession reinsurance program for the 2020 calendar year.
The ARPC has secured AUD 3.45 billion (USD 2.33 billion) of retrocession reinsurance protection at a reduced rate for 2020, up on the AUD 3.315 billion (USD 2.24 billion) secured in 2019, and the AUD 3.065 billion (USD 2.1 billion) program announced for 2018.
The retrocession reinsurance protection sits above the ARPC retention of AUD 250 million (USD 169 million) and is split across four layers of protection with varied attachment points, sitting below the AUD 10 billion (USD 6.8 billion) Commonwealth Guarantee.
The extended AUD 3.45 billion retro reinsurance program, combined with the organisation’s net assets and the AUD 10 billion Commonwealth Guarantee, provides scheme capacity in the event of a declared terrorism event, against commercial and eligible property assets, of AUD 13.7 billion (USD 9.3 billion).
Dr. Christopher Wallace, ARPC Chief Executive Officer (CEO), commented: “ARPC’s retrocession program encourages the global insurance market to participate in providing terrorism cover for Australian-based assets, which protects the Commonwealth (Australian Government) guarantee and Australian taxpayers.
“ARPC achieved a reduction in pricing for the 2020 retrocession program. The price reduction, plus reinsurers’ appetite to participate, prompted ARPC to extend the top layer to $350 million for 2020.
“ARPC remains well positioned to be an effective provider of terrorism risk insurance that facilitates market participation, supports national resilience and reduces potential losses arising from terrorism catastrophe.”