U.S. specialty insurance group Assurant has reduced its exposure to catastrophe events in 2019, in part through the expansion of its catastrophe reinsurance program.
At its 2019 Investor Day this week, Assurant revealed details of its new reinsurance program, which it claimed would significantly reduce its earnings impact from large catastrophe events.
The company said that when modelling the 2019 retention for a 1-in-20 year season, earnings are projected to be $100 million higher than in 2014.
Similarly, in the event of a 1-in-200 year season, Assurant expects earnings to be $100 million higher than in 2014.
The increased reinsurance spend follows a heavy year of cat losses for Assurant, whose 2018 income was impacted by around $170 million of cat losses, $95 million of which occurred in Q4 alone.
In response, the insurer has looked to diversify its earnings, with cat exposed business now making up only 36% of its net operating income, compared to 54% in 2015.
Assurant achieved this through its larger reinsurance program, growth of non-cat exposed business, and through quota share partnerships, it explained.
Additionally, the company hopes to reduce volatility in severe storm seasons through a reduction in its per event catastrophe retention, combined with increased multi-year reinsurance coverage.
Assurant’s reduced its pre-tax per-event catastrophe retention levels to $80 million in 2019, which is $160 million lower than its highest levels in 2012, at $240 million.
It also increased its multi-year reinsurance from 28% in 2018 to 36% in 2019, which will add stability at attractive pricing, investors were informed.