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RLI increases cat reinsurance limit by $90mn at Jan renewals

25th January 2019 - Author: Matt Sheehan

Specialty insurer and reinsurer RLI Corporation has increased its catastrophe reinsurance protection limit by $90 million at the recent January renewals to cover an expected growth in exposures.

RLI Corporation logoCraig Kliethermes, President and Chief Operating Officer (COO) at RLI, explained that about half of the company’s reinsurance spend is placed at year-end, when its broad property and casualty treaties renew.

“We generally saw flat pricing with little change in our retentions,” Kliethermes said during RLI’s fourth quarter earnings call.

RLI paid about 10% more for its property per risk cover due to loss activity in recent years, which will result in an additional $5 million to $6 million estimated spend on property reinsurance for the coming year.

“Effectively, we added $100 million to our tower,” Kliethermes said. “Now, we take a 10% co-participation on that. So, it’s 90 points or $90 million, we added to the top of our tower.”

He added that the approximately $5 million additional premium paid by RLI for its reinsurance protection includes $2 million for the company’s per risk treaty.

“So that $5 million that I referenced, $2 million of that is in our per risk treaty not in the cat part of it,” Kliethermes explained.

“And about half of that cat cover is because of the additional exposure that we’re going to add over the year. Plus, the other half is really just for the $90 million of coverage.”

Asked whether the exposure was effectively just accounting for more hurricane wind zones, the COO replied: “No, we’ve added it over the last year, right. And we continue to think we’re going to see a few opportunities going forward.

“So we want to continue to be in a good place in regards to covering PMLs and things, so we want to make sure we constantly relook at that.”

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