The UK’s government-backed mutual terrorism reinsurer Pool Re has renewed its 2019 retrocessional reinsurance program, at an expanded size, that covers property damage arising from nuclear, biological, chemical, and radiological attacks; those arising from cyber-triggered terrorist losses; as well as conventional terrorist acts.
The £2.3 billion program, which is provided on a three-year basis and represents a £200 million increase from 2018, was successfully placed with over 50 global reinsurers, led by Munich Re.
The retrocession is structured as an aggregate excess of loss treaty which will attach if Pool Re’s losses, individually or in aggregate, exceed £500 million in any year, after member insurers’ combined retention of £250 million per event or £410 million in aggregate.
The £2.3 billion includes £75 million provided under Pool Re’s recent terrorism catastrophe bond. The retrocession wraps around the bond to form a notional layer of £200 million in excess of £500 million.
“We are delighted with the ongoing support we have received from our continuing reinsurers, and pleased to welcome new carriers to the risk and I thank Guy Carpenter for their efforts in completing this record-breaking placement,” said Julian Enoizi, Pool Re Chief Executive Officer.
“It provides resilience for UK businesses, while moving the taxpayer even further away from their implicit coverage of extreme commercial losses from terrorism.”
The risk was modelled using Pool Re’s own model, developed in collaboration with Cranfield University and Guy Carpenter.
The model fully deployed Computational Fluid Dynamics to assess blast risk which considers how blasts move over, around and between buildings.
Steve Coates, Pool Re’s Chief Underwriting Officer, added, “As our modelling technology has improved, we have been able to increase appetite for a share of Pool Re’s assumed risk.”
“We will continue to look for increased retrocession and capital markets capacity to shift even more of that risk to the private sector, provided of course the capacity is of acceptable security and can be written on a long-term basis.”
