US primary insurer Travelers reported that it’s eaten through almost 9% of its catastrophe aggregate reinsurance retention in the first-quarter of 2022, as the firm accumulated $175 million of qualifying losses.
Back at the January reinsurance renewals, Travelers shrunk its aggregate coverage, with tighter terms due to market conditions and heightened loss activity.
For this year, the aggregate cover only protects from PCS-designated catastrophe events in North America in excess of $10 million per catastrophe event, while the treaty now covers 45% of a $500 million layer and attaches at a $2 billion retention.
This compares with the 2021 aggregate treaty offering protection from PCS-designated events in North America in excess of $5 million per cat event, when the treaty also covered 70% of a $500 million layer, attaching at $1.9 billion.
So, for 2022, Travelers has $225 million of aggregate reinsurance protection through the calendar year, with the remaining 55%, or $275 million of qualifying losses retained by Travelers. This compares with aggregate protection of $350 million in 2021.
In the insurer’s Q1 2022 earnings call, Dan Frey – Chief Financial Officer, commented that, “Through March 31, we’ve accumulated $175 million of qualifying losses toward the aggregate retention.”
$175 million of qualifying losses means that Travelers has eroded 8.75% of its aggregate reinsurance deductible in the first-quarter of 2022.
In both 2021 and 2020 the insurer completely exhausted its aggregate reinsurance protection amid elevated loss activity in the U.S.
But while the firm has currently eroded almost 9% of the treaty’s $2 billion retention, the restructured layer will take more losses to attach, and with each loss needing to be larger, smaller events that may have contributed previously may not in the months ahead.
