Kin expands cat reinsurance program, says no ILS capital involved

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Home insurtech company Kin Insurance has upgraded and expanded its catastrophe reinsurance program, which the company says reflects its commitment to helping homeowners most affected by climate change.

kin-insurance-logoThe new catastrophe reinsurance program that Kin has secured at the renewals this year is backed by 42 traditional reinsurance carrier partners, but the company told us that it does not have any insurance-linked securities (ILS) participation in the program.

The reinsurance tower has been underwritten by 42 blue chip reinsurers, the majority with a financial rating of A- or higher from AM Best.

The reinsurance will cover a first-event catastrophe loss at the 1-in-160 year return period for Kin.

Financial stability rating requirements mandate that a 1 in every 130 year loss be covered by reinsurance, but Kin has opted to secure more protection to the 160 year level on a first-event basis.

Kin also said that its new catastrophe reinsurance program includes more than $300 million in reinsurance protection for hurricane events.

“The most important service we provide to our customers is covering their damages for the rarest and strongest events,” Angel Conlin, chief insurance officer at Kin commented. “Our robust reinsurance program ensures we can meet our obligations to our policyholders.”

Kin believes that extending its reinsurance tower, to cover loss events further into the tail, is not just protecting the company better, but also its customers, especially as climate risks are said to be increasing.

Kin also said that the renewal saw it able to reduce its reinsurance costs as a percentage of premium, while significantly reducing risk retention as a percent of premium.

Despite growing premiums approximately 3x, Kin’s first event retention has stayed at $5 just million, the insurtech noted. Kin also explained that its upgraded reinsurance program applies to all states and policies within the Kin Interinsurance Network.

Conlin added, “Our main priority is to balance the cost and benefit of extreme event probabilities to best protect our policyholders.”

Kin is likely to continue expanding its catastrophe reinsurance program as it grows its homeowners book.

The company recently went public through a merger with a SPAC, which has helped it build more capital to expand its business.

Interestingly, insurance-linked securities (ILS), reinsurance, insurtech and transportation focused investment manager Hudson Structured Capital Management Ltd. (HSCM) has been a long-time investor in Kin, since 2019 when it participated in a $47 million funding round for the company.

HSCM then participated in a $35 million Series B funding round for Kin as well, in 2020., which was followed by the investment manager co-leading a $64 million Series C investment round for Kin earlier in 2021.

HSCM then supported the SPAC acquisition, leading an $80 million so-called PIPE investment to help accelerate growth for Kin Insurance, Inc. as part of its acquisition by Omnichannel Acquisition Corp., a publicly-traded special purpose acquisition company (SPAC) led by serial entrepreneur Matt Higgins.

So it’s perhaps a little surprising not to see some ILS capital backing Kin’s catastrophe reinsurance program, but it’s clear that ILS market capital managed by Hudson Structured has given the insurtech even greater support in getting to the stage of development it is currently at over the last few years.

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