US property & casualty insurance giant The Travelers Companies was “pleased” with the reception its latest catastrophe bond received in the market, as it increased the amount of reinsurance cover it has from capital market cat bond investors during its latest renewal.
Travelers secured $575 million of multi-year collateralized property catastrophe reinsurance with the Long Point Re IV Ltd. (Series 2022-1) issuance that came to market in advance of the renewals towards the end of May.
The company has been utilising Longpoint or Long Point branded catastrophe bonds as a way to access reinsurance protection from the capital markets since at least 2007, returning each few years to renew the multi-year protection these cat bonds offer the insurer.
This latest is the seventh Long Point cat bond we’ve covered here at Artemis over that period.
Speaking during the Travelers Q2 earnings call last week, CFO of the insurer Dan Frey discussed the new Long Point catastrophe bond in the context of Travelers broader reinsurance renewals.
“During the second quarter, we issued a new 4-year cat bond, providing uninterrupted coverage upon the expiration of our prior cat bonds,” Frey explained.
“The new bond, Long Point Re IV Ltd., increases the amount of coverage available to $575 million, the recently expired cat bonds had provided $500 million worth of coverage. We’re very pleased with the results.”
Frey believes Travelers track-record has helped it in securing reasonable pricing and terms in the hardened reinsurance marketplace at the mid-year renewals.
“Here again, our disciplined underwriting and consistent outperformance in the property line enabled us to increase our coverage and attain a reasonable rate online at a time when some parts of the market are finding reinsurance capacity harder to come by,” he said.
In addition, he doesn’t believe the firmer pricing conditions in reinsurance will impact Travelers performance, as the company feels it is better compensated on the inwards side thanks to higher insurance pricing.
He explained, “The structure of our main cat reinsurance program is generally consistent with the expiring program and while, as expected, we did see some price increase, it was in line with the price increases we’re obtaining on the direct property premiums we’re writing. So there’s no adverse impact on margins.”
Travelers new catastrophe bond provides it with $575 million of indemnity and per-occurrence reinsurance across a four-year term against losses from U.S. tropical cyclone, earthquake, severe thunderstorm, and winter storm events, across Northeastern U.S. states.