US primary insurer Travelers has disclosed details of its reinsurance renewals for 2023, which include a higher attachment point for its occurrence catastrophe excess-of-loss (XoL) program, as well as the apparent non-renewal of its aggregate catastrophe cover.
The company reports that it raised the attachment point for its per-occurrence treaty by $500 million to $3.5 billion, but has since confirmed that it did not renew its expiring aggregate cover.
Travelers recorded net income of $819 as part of its results for Q4, down 39% from the previous year, with net income for the full year similarly falling by 22% to $2.84 billion.
It also recently emerged that Travelers was approaching the trigger level for its property aggregate cat XoL treaty for 2022, after the firm announced a Q4 cat load of $459 million.
This took the accumulation of qualifying losses to just shy of $1.9 billion, so very close to its aggregate trigger of $2 billion.
With Travelers having also made recoveries on its aggregate reinsurance program in the three preceding years, it’s possible that the insurer simply wasn’t able to secure this coverage again with the terms it needed, particularly given the already-challenging conditions at January 1.
Usually, Travelers would renew both its per-occurrence and aggregate cat programs at January, but the company has given no indications that it plans to re-instate its aggregate coverage after opting not to renew in January.
However, management did note in an earnings call that they don’t expect to report any noticeable impact to net underlying loss ratios without this reinsurance in place, given recent premium growth, with NPW up 10% through Q4 to $8.82 billion.
For the per-occurrence program, Travelers reports that the terms of the coverage remained the same, besides the higher attachment point, with 90% of a $2 billion layer above the $3.5 billion attachment protected.
The treaty also provides that qualifying losses for each catastrophe occurrence must be above a $100 million deductible.
Travelers also maintains several other catastrophe reinsurance agreements that remain in effect as of January 1, 2023, including one related its Long Point Re III cat bond, as well as XoL treaties for Northeast Property, Middle Market Earthquake, Personal Insurance Earthquake, Canadian Property, and other international treaties.