Munich Re leads ‘largest’ retro programme for UK terrorism backstop Pool Re

UK government-backed terrorism backstop  Pool Re has completed its “largest” retrocession programme led by Munich Re, with Hannover Re and Fidelis among those providing significant capacity.

The new three-year placement involved more than 50 global reinsurers. It provides £2.5 billion of cover, increased from £2.475 billion.

Pool Re’s chief executive Julian Enoizi (pictured) highlighted that the extended retrocession placement is the “largest terrorism reinsurance programme in the world”. Chief underwriting officer Steve Coates noted the placement was obtained at “unaltered pricing” on a risk adjusted basis.

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

It is structured as an aggregate excess of loss treaty that will respond if Pool Re’s losses, individually or in aggregate, exceed £400 million in any year.

In order to maximise reinsurer participation and pricing, the limit and attachment of layers has been somewhat amended, with the addition of a new layer 4 of £25m providing room for growth.

Coates said: “We are delighted to achieve an increase in this important retrocession placement which puts further distance between the taxpayer and the cost of terrorism losses. We have received broad support from reinsurers around the world who appreciate our strong focus on risk management, supported by credible, advanced modelling tools.”

Enoizi commented: “We can be rightly proud of an excellent outcome for this placement. Pool Re’s extended retrocession placement is the largest terrorism reinsurance programme in the world and we have consistently sought to increase the amount we place as part of our strategy to return UK terrorism risk to commercial markets.

“Our ILS bond, where we are also seeking increased levels of indemnity, is being finalised and we hope to be able to announce its completion in the coming days.”

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