Pool Re upsizes retro renewal 15% to £2.75bn. Sources say new cat bond likely
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UK government backed mutual terrorism reinsurance firm Pool Re has secured another increase in size to its retrocession program, lifting it by 15% from £2.4 billion to £2.75 billion at the latest renewal, while our sources suggest that a new vintage of the Baltic terrorism catastrophe bond is expected to add to this.
Pool Re placed its £2.75 billion retrocession programme for 2025 with more than 60 international reinsurers.
The renewal featured participation from Hannover Re and The Fidelis Partnership, among others, while the placement was brokered by Guy Carpenter.
Pool Re’s new retro program covers property damage resulting from acts of terrorism certified by the UK Government, covering both conventional and nuclear, biological, chemical and radiological (CBRN) attacks, as well as those from a limited cyber extension.
The retrocession program is structured as an aggregate excess of loss cover.
Our sister publication, Reinsurance News, reported in February that Pool Re was seeking more private market retrocession coverage when compared with previous years, following recent changes made to the company’s retrocession agreement with HM Treasury.
According to HM Treasury, the changes to the retro agreement will provide the opportunity for more of the financial risk arising from terrorism to be returned to the private market, while ensuring businesses are still able to access affordable terrorism insurance.
“We are pleased with the strong support received from reinsurers, with many existing markets increasing their capacity and a number of new partners added to our panel. This increased participation reflects confidence in our approach and enhances our ability to manage risk effectively. We also value our continued collaboration with Guy Carpenter in securing this deal,” commented Jonathan Gray, Pool Re’s CUO.
“The expanded programme aligns with Pool Re’s strategy to transfer UK terrorism risk to the market, further reducing the taxpayer’s exposure to potential losses. This remains a key pillar of our strategy and we are delighted with this successful outcome,” said Tom Clementi, Pool Re’s CEO.
“Guy Carpenter is proud to have secured another successful renewal for Pool Re, supporting them with their mandate to return more terrorism risk to the private market. Obtaining £2.75bn of capacity is a significant milestone and we thank all of Pool Re’s reinsurers for their support,” added Paul Moody, Guy Carpenter’s CEO UK.
Artemis’ sources suggest that with Pool Re’s currently in-force Baltic PCC 2022 cat bond scheduled to mature later this week, it is anticipated that the terrorism risk catastrophe bond will see a new vintage issued.
Should that happen, Pool Re would be able to lock-in some more multi-year retrocession from the capital markets, which would effectively expand its retro tower by however much in new limit is able to be placed with insurance-linked securities (ILS) funds and investors.
Last August, Pool Re signed up both Aon Securities and Howden Capital Markets & Advisory as its insurance-linked securities (ILS) advisors.
Pool Re has so far secured £175 million of retro terrorism ILS capacity from UK domiciled special-purpose vehicle Baltic PCC Ltd. via cat bond issuances in 2019 and 2022, to support its retrocessional reinsurance program arrangements.
Pool Re upsizes retro renewal 15% to £2.75bn. Sources say new cat bond likely was published by: www.Artemis.bm
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