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Palomar adds aggregate XoL layer, reveals reinsurance recoveries


Palomar Insurance Holdings, the speciality California-based insurer that provides largely catastrophe exposed property products, has expanded its aggregate reinsurance protection with a new purchase, but also revealed some recoveries under other reinsurance contracts from the end of last year.

palomar-specialty-insurance-logoPalomar has added a new $25 million aggregate excess of loss reinsurance cover that incepts from April 1st 2021.

The new aggregate layer has an attachment point of $30 million, offering coverage for qualifying events within its per occurrence retention.

Coverage applies across all perils, which Palomar said are include earthquakes, hurricanes, convective storms, and floods, plus other perils, with qualifying events needing to drive a $2 million loss to fall under this new aggregate reinsurance cover.

Reinsurance is clearly critical to Palomar’s business model, given its property catastrophe exposure.

It has revealed a $4.1 million expense related to a reinsurance layer that it has recovered from in full.

That reinsurance layer provided Palomar with $20 million of coverage, in excess of $10 million and was fully utilised (including a reinstatement) because of severe weather activity experienced in the second half of 2020.

Palomar placed a backup reinsurance layer to provide equivalent coverage through June 1st 2021, the company also explained, but a portion of this backup layer was also utilised during the fourth quarter of 2020, resulting in a reinstatement premium of $0.8 million.

The layer remains in place for storms and earthquakes through to June, Palomar said.

So reinsurance has again played a critical role for Palomar and the company continues to adjust its reinsurance buying to suit its experience and portfolio as it evolves.

Finally, Palomar also revealed pretax catastrophe losses of between $15 million to $16.5 million for Q4 of 2020, also noting around $1.5 million of favorable development from third quarter 2020 storms.

Q4 losses are largely from Hurricanes Delta and Zeta, the company said.

Palomar renewed its main reinsurance program last May to provide it with coverage up to $1.4 billion.

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