The Australian Reinsurance Pool Corporation (ARPC), a government-backed terror risk reinsurance venture, has reported an operating result of $84.9 million for the year ending June 30th, 2021.
The result was 53.2% higher than the $55.3 million that had originally been forecast for the year.
Gross written premiums were similarly 17.3% higher than forecast at $258.1 million and net assets came in 5.2% higher at $595.4 million, although investment income was 29.1% lower than forecast at just $3.9 million.
ARPC explained that the financial performance for 2020-21 was better than predicted largely due to rate increases in underlying commercial insurance premiums.
The Corporation also reported that it performed well against the targets set in the 2020-24 Corporate Plan, and maintained funding capacity for claims of $13.7 billion.
This capacity was provided through a combination of $595 million ARPC net assets, $3.475 billion retrocession reinsurance cover purchased from 73 global reinsurers and the $10 billion Commonwealth guarantee.
There were 237 insurer customers covered by ARPC for terrorism risk under commercial property and business interruption policies.
“ARPC’s Annual Report shows ARPC achieved excellent performance operationally and financially during 2020-21,” said ARPC CEO Christopher Wallace.
“During the year, ARPC continued to observe increases in commercial insurance premiums in the private insurance market, while global capacity for terrorism risk reinsurance remained stable,” he noted.
“Terrorism insurance pools like ARPC exist in many major countries and are recognised as an efficient way to provide cost effective terrorism reinsurance to the commercial insurance sector. ARPC is highly regarded by reinsurers owing to its deep expertise in blast and plume catastrophe modelling and strategic use of retrocession, where ARPC purchases reinsurance cover from Australian and global markets.”
