TransRe, the reinsurance underwriting brand of the Alleghany Corporation, has reported a much improved quarter for its property reinsurance business, as a more benign catastrophe claims environment helped to drive a profitable period.
TransRe’s property reinsurance division fell to a loss in the first-quarter of 2021, as losses from winter storm Uri and the freezing weather in Texas, as well as other catastrophe losses and some COVID-19 impacts dented profits last quarter.
In the second-quarter, lower losses led to a combined ratio of 90.6% for thee property reinsurance unit, helping to drive a $41.5 million underwriting profit for the unit.
That wasn’t enough to offset the loss from Q1 though and for the first-half of 2021, TransRe’s property reinsurance unit reported a 102.5% combined ratio and an underwriting loss of $19.9 million for the period.
Gross property reinsurance premiums written in the property reinsurance unit were up 22% in Q2, at $505.4 million.
Net earned premiums rose by almost 34% though, to $438.9 million, suggesting that with the higher pricing effects in the reinsurance market right now, TransRe should have a good chance of earning through much better profits if catastrophes remain below budget.
Across the entire reinsurance business, TransRe’s premiums rose 29.7% in the second-quarter, as the company grew significantly in some of its casualty and specialty lines.
Catastrophe losses in the second quarter and first six months of 2021 were $27 million and $127 million for TransRe, while the overall combined ratio came out at 91.1% and 95% respectively.
TransRe uses a significant amount of collateralized retrocessional reinsurance, on both a quota share and excess of loss basis, through its own Pangaea reinsurance sidecar which is collateralized by investors that allocate to the vehicle, as well as other private arrangements.
The reinsurer also fronts some business for ILS fund manager Integral ILS, which likely provides another lever it can use for managing catastrophe PML.
On the private ILS side, 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 TransRe’s Pangaea reinsurance sidecar is less clear, with these issues being quite private.