Universal expands reinsurance tower to $3bn

Universal Property & Casualty Insurance Company (UPCIC) has expanded the top of its reinsurance tower for a single Florida event by $350 million to $3.00 billion as part of Universal Insurance Holdings’ 2018-2019 reinsurance programmes, effective June 1, 2018.

“Using RMS modelling estimates as of 3/31/18, the top level of our reinsurance tower for the 2018-2019 programme would provide coverage for over a 1-in-300 year event, as compared to a 1-in-272 year event for last year’s programme, said Universal Insurance Holdings’ chief risk officer Jon Springer. “Importantly, $1.00 billion of this coverage has limits that automatically reinstate to ensure protection in multi-event scenarios.”

Participants in the Universal Insurance Holdings’ reinsurance programme for UPCIC and American Platinum Property and Casualty Insurance Company (APPCIC) include Nephila Capital (via Allianz Risk Transfer), Everest Re, RenaissanceRe, Chubb Tempest Re and Lloyd's of London syndicates.

"We are pleased with the completion and outcome of the 2018-2019 reinsurance programmes for both of our insurance companies,” Springer said.

“With this renewal, the first following the impact of a major hurricane on Florida and other Southeastern states this past September, we have continued building on the recent trend of adding additional conservatism to our reinsurance programs while decreasing the percentage of premium spent on reinsurance. Importantly, we accomplished this goal while maintaining all our core relationships with our reinsurance partners who paid catastrophe losses in 2017 as a result of Hurricane Irma.”

UPCIC maintained the same $35 million catastrophe retention for a Florida loss and the same $5 million catastrophe retention for a loss involving states other than Florida, despite growing total insured value during calendar year 2017 by 17 percent in all operating states and 46 percent in states other than Florida.

“To further insulate itself for future years, UPCIC has also now successfully secured over $365 million of catastrophe capacity with contractually agreed limits that extend coverage to the 2019 wind season or beyond. All $365 million of this multi-year capacity is below the Florida Hurricane Catastrophe Fund layer, where reinsurance costs are the highest,” Springer said.

APPCIC reduced the overall percentage of premium spent on reinsurance, while maintaining the same $2 million catastrophe retention, and also expanding the top of its reinsurance tower for a single event by 24 percent more than last year’s top end at the time of placement as the newly established commercial lines program continues to grow at a modest pace.

“In completing the 2018 renewal cycle, it is clear that our panel of leading reinsurance partners is eager to partner with companies like Universal, who are financially stable, have a strong infrastructure and can efficiently handle a large volume of claims from a major catastrophe,” Springer commented. “The continued support of these partners has helped put us in the strongest position in our company’s history as we enter the 2018 hurricane season."