Australian primary insurer Suncorp has made some adjustments to its FY23 reinsurance placement to reflect “the material hardening” of the reinsurance market after heightened natural catastrophe activity.
In line with the firm’s FY22 July reinsurance renewal, Suncorp has maintained the overall maximum retention at $250 million.
However, the upper limit of the tower has increased, year-on-year, from $6.5 billion to $6.8 billion, and covers the carrier’s Home, Motor, and Commercial Property portfolios across Australia and New Zealand.
For 2023, the program includes one prepaid reinstatement that covers losses up to $6.8 billion and two additional prepaid reinstatements which cover losses up to $500 million.
Alongside its main catastrophe reinsurance tower, the insurer has procured three dropdown aggregate covers. The first two are unchanged from the FY22 placement, while the attachment for the third dropdown has increased by $50 million to $100 million, in turn lowering the level of reinsurance to $50 million. Additionally, Suncorp has in place a prepaid reinstatement for dropdown two and three.
Suncorp also purchases aggregate excess of loss reinsurance cover. Here, the insurer has raised the attachment point of the cover from $650 million to $850 million, with the amount of cover provided remaining at $400 million. At the same time, the firm has increased the per event deductible by $5 million to $10 million.
“Total reinsurance premiums for FY23 have increased significantly as a result of the hardening global reinsurance market,” says Suncorp.
As a result of the changes to its reinsurance placement and the nat cat experience over the past 12 months, the large primary insurer anticipates an increase in its natural hazard allowance for FY23 to $1.16 billion, compared with $960 million in FY22.
These changes, says the firm, are expected to raise target capital by some $135 million, while its Excess Technical Provisions in capital are expected to come down by roughly $170 million.
