Assurant extends reinsurance tower again, now $1.34bn of Florida cover

US specialty insurance group Assurant has extended the top of its catastrophe reinsurance tower again at the just completed July renewals, with its gross cover for a Florida loss now reaching $1.34 billion.

At the same time, the US program provides Assurant with $1.16 billion of reinsurance protection, above an $80 million retention, up on the $965 million of the prior year.

It’s notable that, while the $80 million first-event retention is unchanged, last year Assurant had reported its retention was lower at $55 million for a second and third event.

But at the 2022 reinsurance renewal, it seems Assurant just has a standard and higher $80 million retention across all events.

Assurant has been optimising its catastrophe reinsurance through recent years and now, the insurer says that in a 1-in-50-year season it expects to retain roughly 75% of Adjusted EBITDA compared to approximately 54% in 2018, or just 40% in 2017.

Assurant is clearly pleased with the results of its reinsurance renewal, saying it has been able to, “Mitigate pricing impacts compared to the broader market given the strength of its partnerships with over 40 reinsurers and its use of multiyear coverage.”

The growth in the program tower comes as Assurant’s lender-placed exposure increased as a result of higher average insured values.

Still, the tower covers the company against a 1-in-174-year storm, while its $80 million per event retention protects against a 1-in-3-year storm, based on projected modeled loss estimates.

Including its Florida Hurricane Catastrophe Fund cover, Assurant’s US reinsurance tower protects it against gross Florida losses of up to approximately $1.34 billion, up on the prior year’s $1.2 billion.

Multiyear reinsurance now covers 45% of the US tower, which is down slightly on the prior year’s 52%.

Importantly for frequency events, Assurant’s reinsurance continues to have a cascading feature, giving multi-event protection where higher coverage layers (Layers 3 through 6) cascade down to $110 million as the lower layers and reinstatement limits are exhausted.

Naturally, given the market environment and the extended tower, Assurant’s reinsurance premiums for 2022 come out at $189 million pre-tax, which is up on last year’s $149 million.