Global insurer Chubb has disclosed the terms of its reinsurance buying at the April 1, 2019 renewals, which saw it renew both its global property catastrophe and terrorism coverages.
The company explained that the global property cat program, which applies to its North American and International operations, was renewed with modest enhancements in coverage from the expiring program.
It is effective April 1, 2019 through March 31, 2020 and consists of three layers in excess of losses retained by Chubb on a per occurrence basis.
Meanwhile, Chubb renewed its terrorism coverage with the same limits and retention and percentage placed, with the exception that the majority of the cover is on an aggregate basis above its retentions, without a reinstatement.
Under the coverage, Chubb will retain losses in the U.S up to $1.0 billion and internationally up to $175 million.
After this, for the U.S, all natural perils and terrorism losses in the first layer range of $1.0-1.2 billion will be partially placed with Chubb’s reinsurers, while losses in the second layer range of $1.2-2.2 billion and subsequent third layer range of $2.2-3.5 billion will be fully placed with reinsurers.
Internationally, all natural perils and terrorism losses in the range of $175 million to $1.175 billion will form part of the second layer coverage and will be fully placed with reinsurers, while losses in the range of $1.175-2.475 billion will form part of the third layer and will also be fully placed with reinsurers.
Chubb also has a property catastrophe bond in place that offers additional natural catastrophe protection for certain parts of its portfolio, covering regions from Virginia through Maine.
The East Lane VI 2015 bond currently provides $250 million of coverage as part of a $427 million layer in excess of $2.0 billion retention through March 13, 2020.
According to Chubb’s models, which estimate probable maximum loss (PML) from natural catastrophes, net of reinsurance, for the 1-in-100 return period scenario, there is a 1% chance that its annual aggregate losses incurred in any year from U.S. hurricane events could exceed $2.7 billion.
Similarly, for California earthquake events, Chubb estimates a 1% chance that its single occurrence losses incurred in any year could exceed $1.3 billion for the 1-in-100 year return period.
In terms of worldwide losses (including hurricanes, typhoons, convective storms and earthquakes), Chubb has modelled a 1% chance that its annual aggregate could exceed $3.8 billion for the same return period.
Chubb disclosed the terms of its renewed reinsurance coverage as part of its first quarter results for 2019, which saw the insurer’s net income remain fairly stable at $1.04 billion.
Total company and P&C net premiums written were $7.3 billion and $6.7 billion, respectively, both up 2.9%, while its P&C combined ratio improved slightly from 90.1% in Q1 2018 to 89.2% this year.
Catastrophe losses for the quarter were $250 million, pre tax ($201 million, after-tax), down from $380 million, pre-tax ($303 million, after tax), for the same period in 2018.