Travelers expands northeast catastrophe reinsurance treaty at renewal

US property casualty insurer Travelers has expanded the size of its main Northeast Property Catastrophe Excess-of-Loss Reinsurance Treaty for 2022, with the reinsurance agreement now set to provide the company $750 million of cover.

Travelers always renews some of its core catastrophe reinsurance arrangements at July 1st and this year added $100 million of cover to its northeast cat treaty.

From July 1st, Travelers benefits from up to $750 million of reinsurance across the $850 million layer of coverage, so roughly 88%, after a $2.25 billion retention.

A year ago, the treaty provided $650 million of cover across the $850 million layer of Travelers reinsurance tower.

The northeast cat treaty covers Travelers for losses from Virginia to Maine from July 1st 2022 through and including June 30th 2023.

The covered event could occur anywhere in North America and its waters though, while recoveries under Travelers in-force catastrophe bonds would be applied first to reduce losses subject to this treaty.

The Travelers northeast catastrophe reinsurance treaty covers all perils, including but not limited to hurricanes, tornadoes, hail storms, earthquakes, winter storms and/or freeze losses.

Terrorism and cyber events are covered in limited circumstances, Travelers said, while communicable disease and nuclear, biological and radiological terrorism attacks is excluded from this reinsurance treaty.

Travelers sponsored new catastrophe bonds back in May, which provide the insurer with the Long Point Re IV Ltd. (Series 2022-1) issuance securing the carrier $575 million of collateralized catastrophe reinsurance.

Travelers also renewed its Middle Market Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty at July 1st, securing it $248 million of reinsurance across a $275 million layer, subject to a $110 million retention.

This earthquake reinsurance treaty is slightly smaller than the prior years $253 million of cover across the same layer of risk.

Also renewed was the Canadian Property Catastrophe Excess-of-Loss Reinsurance Treaty, which provides coverage for 50% of losses in excess of C$100 million, up to C$200 million and 100% of losses above C$200 million, up to C$500 million.

The Canadian treaty last year covered right up to C$600 million, so the top-end has been reduced by C$100 million at the 2022 renewals.

Earlier this year, Travelers expanded its core per-occurrence catastrophe cover at the reinsurance renewals in January 2022, but shrunk its aggregate cover and renewed it at tighter terms, reflecting market conditions and loss activity.