Pool Re completes £2.475bn terrorism retrocession placement

Pool Re has completed its three-year £2.475bn retrocession placement with 56 international reinsurers. The programme is led by Munich Re with Hannover Re and Fidelis providing significant capacity.

The retrocession covers property damage arising from nuclear, biological, chemical, and radiological attacks; cyber-triggered terrorist losses; as well as conventional terrorist acts.

Steve Coates, Pool Re’s chief underwriting officer, said: “Despite a difficult market we were delighted to achieve flat pricing for this important placement. Through our Solutions offering, Pool Re has invested significantly in data and analytics over recent years with a focus on modelling of CBRN risks, which is particularly relevant in light of the pandemic. Reinsurers know that we have a strong focus on risk management through our research, and combined with their view of the terrorism market as a sensible diversification away from pure natural catastrophe risk, this means that we were able to engage with a number of new markets and achieve a very positive result.”

Julian Enoizi, Pool Re chief executive, said: “A core part of our strategy is to further distance the taxpayer from potential loss and we continue to look for creative and innovative ways to achieve that. Pool Re’s extended retrocession placement is one of the largest reinsurance deals in the world and we have sought to increase the amount we place every year since 2015 as part of our intention to return UK terrorism risk to commercial markets. We are delighted with the outcome for this new three year placement.”

The retrocession is structured as an aggregate excess of loss treaty which will respond if Pool Re’s losses, individually or in aggregate, exceed £400m in any year, after member insurers’ combined retention of £250m per event or £420m in aggregate. The £2.475bn is an increase from £2.4bn in 2019 and includes £75m provided under Pool Re’s existing terrorism catastrophe bond.

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