In December of last year, TWIA said that it expects to purchase an aggregate amount of reinsurance protection of $1.88 billion for 2020, based on an attachment point of $2.2 billion and at an expected cost of a little over $93 million.
As well as the decline in the amount of combined catastrophe bond and traditional reinsurance protection, TWIA said that it expected to achieve a rate-on-line for the overall 2020 reinsurance program of between 4.3% and 4.95%.
Now, after some months and following a presentation by TWIA’s reinsurance broker, Guy Carpenter, the TWIA Board has determined that in order for TWIA to be covered for losses up to a 1-in-100 probable maximum loss hurricane event for the year, the residual insurer requires $4.2 billion of coverage, including loss adjustment expenses.
In order to bring its funding level up to the requirement, the Board has directed TWIA staff to place a combination of cat bond and traditional reinsurance in an aggregate amount totalling $2.1 billion. However, while the limit required has increased, the expected rate-on-line for the 2020 program has now declined from that expected in December, to a range of 4.25% to 4.5%.
The organisation still expects that its reinsurance costs will be around $93 million for the 2020 program, while the attachment point is set at around $2.1 billion.