US primary insurance carrier Travelers has grown the size of its main Northeast Property Catastrophe Excess-of-Loss Reinsurance coverage by $100 million at the July 1st, 2022, reinsurance renewals, as the firm saw price increases aligned with those seen on its inwards book.
For 2022, the Northeast Property Catastrophe reinsurance agreement sees Travelers benefit from $750 million of protection across the $850 million reinsurance layer, subject to a $2.25 billion retention.
In contrast, the 2021 renewal of this treaty provided the insurer with $650 million of protection across the $850 million layer of the carrier’s reinsurance tower.
Travelers explains that the July 1st, 2022, renewal provides coverage for losses arising from a single occurrence and allows for a single reinstatement, with reinsurance cover provided for all perils, including for terrorism and cyber events in limited circumstances. Like last year, this layer of the program excludes coverage for communicable disease and nuclear, biological and radiological terrorism attacks.
The 2022 northeast property cat XoL treaty covers territory from Virginia to Maine from July 1st, 2022, through to and including June 30th, 2023. Travelers explains that the covered event could occur anywhere in North America and its waters, with recoveries under the company’s in-force catastrophe bond being applied first to lower any losses subject to the treaty.
As a reminder, Travelers sponsored a $575 million Long Point Re IV Ltd. (Series 2022-1) catastrophe bond transaction in May 2022, which provides the firm with protection against U.S. tropical cyclone, earthquake, severe thunderstorm, and winter storm events, across Northeastern U.S. states only.
Also at July 1st, Travelers renewed its Middle Market Earthquake Catastrophe Excess-of-Loss treaty. For 2022, this arrangement is sized at $248 million across the $275 million layer of coverage, after a $110 million retention. The carrier explains that for every dollar of loss between $110 million and $385 million, this renewal provides 90% of coverage.
Year-on-year, this slice of protection has shrunk slightly, with last year’s program providing reinsurance protection of $253 million across the same layer.
In addition, the insurer renewed its Canadian Property Catastrophe Excess-of-Loss Reinsurance treaty at July 1st. For the year ahead, this treaty provides coverage for 50% of losses in excess of CAD 100 million, up to CAD 200 million and for 100% of losses in excess of CAD 200 million, up to CAD 500 million.
Year-on-year there’s a slight adjustment with this treaty, as the 2021 Canadian agreement covered losses right up to CAD 600 million, so the top-end has been lowered by CAD 100 million at the 2022 renewals.
These latest reinsurance treaty renewals from Travelers follows its procurement at January 1st, when the firm expanded its corporate catastrophe cover but reduced its aggregate cover, after the exhaustion of this program last year.
Earlier today, Travelers reported its second-quarter 2022 results, revealing a decline in net income on the back of higher catastrophe losses, lower net investment income and a lower underlying underwriting gain.
Following the release, management held an earnings call, during which Dan Frey, Chief Financial Officer (CFO), said of the firm’s renewal that it “did see some price increases, but it was aligned with price increases seen on our inwards book.”
