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United (UPC) extends quota share to June, renews catastrophe reinsurance


United Insurance Holdings (UPC Insurance) has extended the terms of its current 20% catastrophe quota share reinsurance arrangement to run until June, while renewing its catastrophe aggregate and other reinsurance arrangements at the renewals.

United (UPC) has taken its existing quota share with Munich Re, Transatlantic Reinsurance Company (TransRe), and General Reinsurance Corporation (Gen Re) and extended the coverage it provides to run until the start of the wind season.

In addition, at the January 2019 renewal, United (UPC) has renewed its aggregate excess of loss reinsurance agreement, its “all other perils” catastrophe excess of loss coverage and its personal property excess per risk reinsurance tower.

The 20% quota share arrangement, that the insurer entered into for 2018 and cedes 20% of all subject business to the three participating reinsurance companies, had been scheduled to expire at the end of last year.

The quota share arrangement will now expire at May 31st 2019 and remains in force offering the coverage and terms for the extension period.

The company said that it will disclose any further changes to the quota share alongside the renewal of its other catastrophe reinsurance programs around June 1st 2019.

It’s possible that the reinsurance backing the quota share and the insurer want to wait and see what market conditions are like come mid-year renewals before committing to a structure that will support United’s needs.

United (UPC) also renewed its aggregate excess of loss reinsurance agreement, which is a fully collateralized arrangement with a single private reinsurer.

This aggregate arrangement covers all subsidiaries, American Coastal Insurance Company, United Property and Casualty Insurance Company, Family Security Insurance Company, and Interboro Insurance Company, for aggregate losses from all catastrophe perils other than hurricanes, tropical storms, tropical depressions and earthquakes.

UPC retains 100% of the losses up to 5.75% of the insurers’ gross earned premiums, after which the reinsurer will be liable for all losses excess of 5.75% of the insurers’ gross earned premium up to $30 million over the term of the treaty, with any recoveries calculated on a quarterly schedule based on cumulative gross earned premium.

UPC and subsidiaries also renewed the “all other perils” catastrophe excess of loss reinsurance, with private reinsurers all rated A- or better by A.M. Best, which provides $85 million of coverage excess of $15 million per occurrence, to reduce UPC’s losses from catastrophes other than named windstorms and earthquakes.

Finally, United (UPC) also renewed its personal lines excess per risk reinsurance agreement with a single private reinsurer. This cover offers $2.5 million of protection excess of $1.5 million, to reduce the insurers’ personal property exposure to non-catastrophe losses from any single claim. The reinsurer’s maximum liability for losses across the treaty period is $7.5 million on this layer.

As ever, it is safe to assume that the capital markets will have taken a decent share of this January reinsurance renewal, given United’s history of leveraging alternative capital and ILS funds within its business.

Also read: United (UPC) in 2018 Promissum Re collateralized reinsurance arrangement.

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