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Florida Hurricane Catastrophe Fund saves on 2017 reinsurance placement

28th June 2017 - Author: Staff Writer

Acting on behalf of the Florida Hurricane Catastrophe Fund (FHCF), the State Board of Administration (SBA) announced its completed reinsurance placement, ahead of the 2017 hurricane season, to help provide its statutory maximum limit of $17 billion of fully liquid funding.

The FHCF liquidity breakdown consists of $14.9 billion in cash, the $1 billion in risk transfer (reinsurance), and $2.7 billion in pre-event bond proceeds.

The placement was spread out globally among 30 reinsurers, including two fully collateralized reinsurers.

The SBA first purchased reinsurance for the FHCF in 2015, securing $1 billion of coverage at an attachment point of $12.5 billion, and in 2016 again bought $1 billion of reinsurance cover but at a lower attachment point of $11.5 billion – for a premium cost of $63.5 million.

The continued softening of the global risk transfer market allowed the SBA to purchase reinsurance at even more favourable pricing conditions this year, with the same $1 billion of limit and attachment point, although for a lower premium of $61 million.

Because of the expected loss ceded to reinsurers, the net cost of the FHCF’s premium formula for insurers would come to just $28.9 million.

The participating reinsurers include:

United States:

American Standard Ins Co of WI – $15,000,000
Everest Reinsurance Co – $5,000,000
Swiss Re America Corp – $175,000,000

Bermuda:

AlphaCat Re Ltd – $40,000,000
Arch Re Ltd – $60,000,000
Argo Re Ltd – $10,000,000
Aspen Bermuda Ltd – $5,000,000
Chubb Tempest Re – $15,000,000
Collateralised Re Ltd – $75,000,000
DaVinci Re Ltd – $82,500,000
Hiscox Ins Co (Bermuda) Ltd – $15,000,000
Markel Bermuda Ltd – $10,000,000
Renaissance Re Ltd – $262,500,000
Tokio Millennium Re AG, Bermuda – $20,000,000
Validus Re Ltd – $50,000,000
XL Bermuda Ltd – $10,000,000

United Kingdom:

Lloyd’s Syndicate 0033 (HIS) – $5,000,000
Lloyd’s Syndicate 0609 (AUW) – $1,500,000
Lloyd’s Syndicate 0727 (SAM) – $1,000,000
Lloyd’s Syndicate 1274 (AUL) – $1,500,000
Lloyd’s Syndicate 1458 (RNR) – $30,000,000
Lloyd’s Syndicate 1910 (ARE) – $10,000,000
Lloyd’s Syndicate 2001 (AML) – $8,000,000
Nautical Mgmt Ltd/ Lloyd’s Synd 2357 – $20,000,000
Lloyd’s Syndicate 2791 (MAP) – $7,500,000
BGS Services (Bermuda) Ltd / Lloyd’s Synd 2987 – $5,000,000
Lloyd’s Syndicate 4444 (CNP) – $35,000,000
Liberty Specialty Services Ltd/ Lloyd’s Synd 4472 – $6,000,000

Asia:

Korean Re Co – $12,000,000
Taiping Re Co Ltd (HK) – $7,500,000

Total: $1,000,000,000

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