UK government-backed terrorism reinsurer Pool Re has completed the placement of its expanded £2.5 billion retrocession programme, led by Munich Re, and with Hannover Re and Fidelis also among those providing significant capacity.
The retro tower was grown from £2.475 billion last year thanks to Pool Re’s new Baltic PCC 2022-1 catastrophe bond.
Our ILS-focused sister publication, Artemis, reports that the Baltic PCC bond was upsized to £100 million, from an initial range of £75 million, while pricing at the mid-point of guidance, which accounts for the £25 million increase.
Pool Re’s retro programme was placed with more than 50 international reinsurers, and provides cover for property damage arising from nuclear, biological, chemical, and radiological attacks (CBRN); those arising from cyber-triggered terrorist losses; as well as conventional terrorist acts.
The three-year retrocession agreement is structured as an aggregate excess of loss treaty which will respond if Pool Re’s losses, individually or in aggregate, exceed £400 million in any year.
In order to maximise reinsurer participation and pricing, the limit and attachment of layers has been somewhat amended, Pool Re explains, with the addition of a new layer 4 of £25 million providing room for growth.
“We are delighted to achieve an increase in this important retrocession placement which puts further distance between the taxpayer and the cost of terrorism losses,” said Steve Coates, Pool Re’s Chief Underwriting Officer.
“We have received broad support from reinsurers around the world who appreciate our strong focus on risk management, supported by credible, advanced modelling tools. This has all contributed to unaltered pricing on a risk adjusted basis.”
Pool Re Chief Executive Julian Enoizi also commented: “We can be rightly proud of an excellent outcome for this placement. Pool Re’s extended retrocession placement is the largest terrorism reinsurance programme in the world and we have consistently sought to increase the amount we place as part of our strategy to return UK terrorism risk to commercial markets. Our ILS bond, where we are also seeking increased levels of indemnity, is being finalised and we hope to be able to announce its completion in the coming days.”
Readers can view the full details of Pool Re’s Baltic PCC 2022-1 issuance, as well as every other catastrophe bond transaction since the market began, in the Artemis Deal Directory.
