Liberty Mutual lifts aggregate reinsurance to attach higher, protect the tail

Liberty Mutual, the insurance and reinsurance group, has disclosed that its aggregate reinsurance protection has been lifted higher up the tower for 2026, with the $500 million of limit set to attach excess of $3.15 billion this year, while on the occurrence limit side it appears one of the Mystic Re catastrophe bonds has been reset to attach lower down.

A year ago, Liberty Mutual had disclosed its property catastrophe reinsurance arrangements after the California wildfires caused a major market loss, explaining that it was well protected for 2025 through $2.8 billion of per-occurrence limit and a further $500 million of annual aggregate protection.

For 2025 the main per-occurrence property catastrophe reinsurance tower extended to $2.8 billion of protection, in excess of a $1 billion retention, with one reinstatement available for most of this coverage.

Now, for 2026, Liberty Mutual has disclosed that its occurrence catastrophe reinsurance tower provides slightly less at $2.75 billion of protection, excess of the same $1 billion and again with most having one reinstatement available.

There is a small sliver of the tower at the top which is hurricane and earthquake reinsurance only, while the Mystic Re catastrophe bonds which are per-occurrence provide named peril protection for North American peak exposures, while the rest of the occurrence reinsurance, the majority, is on an all perils basis.

The aggregate reinsurance tower, which Liberty Mutual revealed last year as providing $500 million of protection, excess of a $2.4 billion aggregate retention and with a $100 million per-event deductible in place for 2025, has changed more significantly for 2026.

For 2026, the aggregate catastrophe reinsurance limit has been shifted much higher up the tower, to provide the insurer the same $500 million of protection but now Liberty Mutual notes it is “at the tail” given the main aggregate limit now sits excess of $3.15 billion of losses.

You can see the renewed reinsurance tower below:

However, Liberty Mutual has also disclosed that it also has $100 million of aggregate reinsurance protection that sits “closer to income-volatility protection”, which we believe may be the $100 million aggregate tranche from the firm’s Mystic Re IV Ltd. (Series 2025-1) catastrophe bond deal.

The aggregate reinsurance comes with different event deductible terms, with the Mystic Re cat bond having a $100 million event deductible, but some of the traditional aggregate limit having $25 million event deductibles for Liberty’s Global Risk Solutions and $75 million for its US retail markets division.

On the occurrence catastrophe bond side of things, Liberty Mutual most recently sponsored the $150 million Mystic Re IV Ltd. (Series 2026-1) issuance that attaches above $1.5 billion and being issued only in December that is where it stays for this year, while the $225 million of occurrence reinsurance from two tranches of the Mystic Re IV Ltd. (Series 2025-1) cat bond also still attach above $1 billion of losses.

However, the Class A notes from the 2025-1 cat bond appear to have been reset lower-down the tower now, as when issued they spanned a percentage of the layer from $2.5 billion to $3.8 billion. But as the reinsurance tower diagram above shows the 2025-1 cat bond coverage now exhausts at $3.25 billion, suggesting this tranche has been reset in order to connect it with the Class B 2025-1 notes coverage (at issuance there was a gap between the two).

There are actually three Mystic Re cat bond issuances, the Series 2023, 2024, and 2025 deals, still in-force to protect Liberty Mutual, with $675 million of this limit is within the per-occurrence reinsurance tower and $100 million in the annual aggregate tower.

But for some reason Liberty’s reinsurance tower diagram does not include the 2024-1 cat bond issuance, which is supposed to remain in-force through to 2027. It’s not immediately clear why.

View details of every catastrophe bond sponsored by Liberty Mutual in our Deal Directory, where you can filter the list by sponsor, trigger type and other features.

Julie Haase, CFO of Liberty Mutual, commented on the reinsurance tower renewed at January 1st during the firm’s recent earnings call.

She explained, “We successfully placed our North America property catastrophe program on attractive terms, maintaining a $1 billion occurrence attachment point while enhancing coverage through all perils placement across the core tower, improved terms and conditions and select multiyear placements.

“We also continue to carry an aggregate property catastrophe treaty to help protect against frequency and severity of loss.

“2026 is the strongest capital position in our company’s history. We will manage this capital base in the best interest of our policyholders today and in the future.”