Travelers almost half-way to aggregate reinsurance trigger after Q1 cats

After just the first-quarter of 2021, US primary insurer Travelers has eroded almost half the deductible sitting under its aggregate catastrophe reinsurance.

As we reported yesterday, Travelers CEO Alan Schnitzer said that after the first-quarter of this year, the insurer had recorded its “highest-ever level of first quarter catastrophe losses” demonstrating just how impactful the last few months have been in the United States.

The company reported $835 million of pre-tax catastrophe losses for Q1 2021, but on a gross basis the total was higher.

In fact, the company disclosed that it suffered $703 million of pre-tax and after reinsurance losses just from February’s winter storms (Uri) and Texas deep freeze.

As a result of this, Schntizer said during the Travelers earnings call yesterday, that a significant amount of its aggregate deductible has now been eroded, with just one quarter of the year gone.

As a reminder, Travelers upsized on its aggregate catastrophe reinsurance protection for 2021, with the renewed treaty set to cover 70% of a $500 million layer, so $350 million of coverage and a $150 million retention.

Travelers 2021 aggregate reinsurance treaty covers qualifying losses from PCS-designated catastrophe events in North America in excess of $5 million per catastrophe event, up to a maximum of $250 million per-event, with the attachment for the coverage sitting at $1.9 billion.

As of the end of Q1, Schnitzer said that “Through March 31st we have accumulated $915 million of qualifying losses towards the aggregate retention.”

Last year, Travelers had made a full $280 million recovery from its property catastrophe aggregate reinsurance during the third-quarter of 2020, after severe weather and hurricanes ate through the layer of protection.

In 2021, the company looks like it could be well on its way to repeat that, despite the attachment being higher this year.