TransRe, the reinsurance underwriting brand of the Alleghany Corporation, saw its property reinsurance business fall to an underwriting loss in the first-quarter of the year, as elevated catastrophe claims dented performance.
At the same time, TransRe has taken advantage of reinsurance market conditions to significantly expand its property reinsurance portfolio, underwriting 37% more in gross premiums during the first-quarter of 2021.
Overall, TransRe’s reinsurance business wrote 15.2% more in net premiums during Q1 2021 and reported a 99.6% combined ratio for the period, delivering a small $5 million underwriting profit for the quarter.
But the profit came from the casualty and specialty reinsurance sides of TransRe’s underwriting business, while its property reinsurance segment fell to a $61.4 million underwriting loss, with a combined ratio of 116.5%.
US winter storm losses amounted to $100 million for the period, while TransRe also reported another $18 million of COVID-19 losses for the quarter.
However, before the catastrophe and additional pandemic losses, TransRe’s reinsurance underwriting profit would have been up 31.5% on the prior year, at $123 million, the company said.
Across the Alleghany reinsurance and insurance businesses, winter storm Uri and the related freezing weather event drove some $181 million of losses during Q1.
TransRe uses a significant amount of collateralized retrocessional reinsurance, on both a quota share and excess of loss basis.
In addition, the company has its own Pangaea reinsurance sidecar which is collateralized by investors that allocate to the vehicle.
Right now, a collateralized quota share is TransRe’s biggest source of reinsurance, suggesting third-party investors have likely softened the blow from the winter storms for the reinsurer.
TransRe has two Kane SAC Ltd. segregated account deals, Rondout and Bowery, which together provide almost $191 million of reinsurance protection through direct collateralized retrocessional reinsurance deals.
The size of the Pangaea sidecar at this time is less clear, with these issues being quite private.
But given the firms use of collateralized quota shares and retrocession, it’s certain that some ILS investors or capital markets players have supported TransRe’s claims payments through the first-quarter of the year, shielding it from a higher catastrophe loss burden.