US primary insurer Travelers has again increased the size of its Northeast property catastrophe excess-of-loss (XoL) reinsurance treaty by $100 million at the mid-year renewals, during which the firm also entered into a new personal insurance hurricane catastrophe XoL treaty.
Renewed at the July 1st, 2023, reinsurance renewals, Travelers’ Northeast property catastrophe XoL treaty for the year provides the firm with $850 million of reinsurance coverage, excess a $2.5 billion retention.
For this part of its 2023 catastrophe reinsurance placement, the agreement covers losses arising from a single occurrence and allows for one reinstatement. Protection is provided on an all peril basis, although for terrorism and cyber coverage only applies in limited circumstances. The treaty excludes communicable disease and nuclear, biological and radiological terrorism attacks.
The Northeast XoL arrangement provides coverage for territory from Virginia to Maine and runs until June 30th, 2024.
In terms of the perils and and regions, the 2023 renewal is the same as the 2022 one. However, this year’s renewal provides $850 million of coverage after a $2.5 billion retention, whereas the 2022 program provided $750 million across $850 million of coverage, with a retention of $2.25 billion.
So the retention has risen year-on-year, while the treaty has been fully placed.
This year, Travelers has also added new personal lines hurricane catastrophe XoL reinsurance treaty, also effective July 1st through and including June 30th, 2024. This new treaty provides for up to $500 million of reinsurance across $1 billion of coverage for a single hurricane event, subject to a $1.75 billion retention. This means that this treaty covers 50% of the $1 billion in coverage above the $1.75 billion retention and up to $2.75 billion.
The arrangement covers homeowners property losses arising from a hurricane or tropical storm in U.S coastal states from Texas to Maine, with the exclusion of Florida.
Additionally, the primary insurer also renewed its middle market earthquake catastrophe XoL reinsurance treaty at the July renewals, as well as its Canadian property cat XoL treaty.
Further, additional reinsurance treaties remain in effect, including its corporate cat XoL agreement; personal insurance earthquake cat XoL reinsurance treaty; and other international reinsurance treaties.
Travelers also secures some of its reinsurance from the capital markets in the form of catastrophe bonds, and currently has one deal, Long Point Re IV Ltd. (Series 2022-1), which remains in-force. This transaction provides the firm with $575 million of per-occurrence coverage for certain property losses on specified lines of business from tropical cyclones, earthquakes, severe thunderstorms, or winter storms from Virginia to Maine.
In May of this year, the company reset the attachment point to $2.48 billion from the previous $2.2 billion.
The 2023 catastrophe reinsurance update from Travelers comes as the firm reports its second-quarter 2023 results, which revealed a small net loss for the company as a result of a steep underwriting loss, driven by a high catastrophe load.
Year-to-date, Travelers has reported catastrophe losses, net of reinsurance, of more than $2 billion compared with a little over $900 million in H1 2022.
