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Universal buys reinsurance for $2.831bn first event. Nephila again a key market


Universal Insurance Holdings, Inc. has purchased first-event catastrophe reinsurance coverage of up to $2.831 billion, citing no significant change in reinsurance markets traded with, or the terms of coverage secured at its renewal.

universal-insurance-logoUniversal’s exposure has changed though, with significantly less Florida wind coverage in-force this year.

The reinsurance tower covers the firm’s Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC) for the year ahead.

Universal said that the fact the top of its first event reinsurance tower had dropped, from the $3.16 billion of the previous year, reflects a 95,340 reduction to UPCIC’s in force wind-covered policy count at March 31st 2023, with Florida representing 83,451, or 88% of those.

The renewed tower also includes $223 million of cost-free catastrophe reinsurance coverage from the Reinsurance to Assist Policyholders (RAP) state-backed layer.

Once again, Universal has said that Nephila Capital, the ILS fund management unit owned by Markel, was one of lead the reinsurance markets for the insurer at its 2023 renewal.

Universal named Nephila Capital, RenaissanceRe, Munich Re, Chubb Tempest Re, Ariel Re and Lloyd’s of London syndicates as the largest participants in its reinsurance renewal, a list which guarantees a strong participation from third-party investor capital behind the markets.

“We are pleased to announce the completion and outcome of the 2023-2024 reinsurance program for both of our insurance companies,” explained Matthew J. Palmieri, Chief Risk Officer. “Reinsurance is one of the cornerstones of our Company and with the support of our global reinsurance partners, we are helping our customers rebuild after Hurricane Ian, as we always do following severe weather events.

“As we look ahead to the 2023 Atlantic Hurricane season and treaty period, we were able to put together a comprehensive catastrophe reinsurance program with identical coverage to our historical programs, providing us with significant financial resources to support our policyholders and protect our balance sheet.”

The program tower renewed for 2023 features some $846 million of coverage limits that automatically reinstate, offering Universal’s insurers a certain level of protection in multi-event scenarios.

UPCIC also secured $277 million of catastrophe reinsurance capacity below the Florida Hurricane Catastrophe Fund, with multi-year terms that extend coverage to include the 2024 wind season.

That is important in the current market, when limits at the lower levels of reinsurance towers, such as below the FHCF, are far more costly and also harder to secure.

UPCIC also continues to have the Cosaint Re Pte. Ltd catastrophe bond in place to provide one limit of $150 million in this year’s program, which is now entering its final risk period.

UPCIC’s first event retention for a Florida loss was unchanged from the prior year at $45 million, while the firm said that APPCIC’s separate retention of $3.5 million has been eliminated, meaning a $3.5 million improvement to the retention on a consolidated basis.

On a cost basis, as ever it’s challenging to compare, as Universal cites the cost of its reinsurance renewal in terms of a percentage of direct premiums earned and with its book having shrunk it’s difficult to know how prices moved.

Universal said that the total cost of its 2023-2024 catastrophe reinsurance program for UPCIC and APPCIC is projected to be around 31.8% of estimated direct premiums earned for the 12-month treaty period, down from an estimated 37.6% a year earlier.

Read all of our reinsurance renewals news and analysis.

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