Travelers buys new $1bn catastrophe reinsurance lower layer at renewal to reduce retention

US primary insurance company Travelers has added an additional $1 billion lower layer to its catastrophe excess-of-loss (XoL) reinsurance treaty at the January 1st renewals, reducing the retention by an equivalent amount to $3 billion while securing $4.675 billion of coverage above that.

Travelers has responded to reinsurance market conditions in recent years, flexing the size of its main per-occurrence catastrophe reinsurance treaty that it always renews at January 1st.

For example, in 2024 Travelers grew the catastrophe reinsurance treaty by a significant 76%, from 2022’s $2 billion, to provide $3.525 billion of cover.

Then, last calendar year, Travelers further increased the amount of protection it received under its occurrence catastrophe excess-of-loss (XoL) reinsurance treaty to $3.675 billion at the January 1st 2025 renewals, but the retention rose to $4 billion as a lower layer was dropped from the placement.

Now, a lower layer has been reinstated and at a larger size, which has added $1 billion of coverage for the company.

That has also had the effect of taking the retention down to $3 billion for the 2026 calendar year, lower than it has been for a few years now, having sat at $3.5 billion in 2023 and 2024, then $4 billion in 2025.

Market conditions and softer reinsurance pricing conditions are likely one driver of this, but in addition Travelers has also grown its book in recent years, so more coverage will have been desirable anyway, we assume.

As a result, Travelers now has occurrence catastrophe excess-of-loss reinsurance in place for 2026, attaching from $3 billion and covering a $4.675 billion majority of losses up to the top of the tower at $8 billion.

You can see a disclosure of the 2026 corporate catastrophe excess-of-loss reinsurance tower versus the prior year below:

Travelers 2026 corporate catastrophe tower covers the the accumulation of property losses arising from one or multiple occurrences, providing for a recovery of up to $4.675 billion across $5 billion of qualifying losses, in excess of a $3 billion retention and with each qualifying loss after the same $100 million deductible as the prior year.

Travelers still has $575 million of reinsurance in-force from its most recent catastrophe bond, the Long Point Re IV Ltd. (Series 2022-1) issuance from May 2022.

That catastrophe bond is scheduled to mature at the start of June 2026, so it will be interesting to see if the insurer returns to the cat bond market in the coming months.

Travelers also has a range of reinsurance protections in-force that it renews at the mid-year, which in 2025 included a reset higher of the attachment point for its Long Point Re IV cat bond.

As a reminder, Travelers elected not to renew its aggregate catastrophe reinsurance treaty back in January 2023. It seems no main aggregate cover has been added back at this most recent January renewal, as the company continues to favour occurrence coverage as it grows.

Today, Travelers reported a stronger combined ratio for both the fourth quarter and full year 2025, as net income strengthened for both periods, while the firm reported record full year operating cash flows of $10.6 billion.

Read all of our reinsurance renewal news coverage.