Progressive renews aggregate reinsurance & 2024 hurricane season cover
Having made recoveries under its aggregate reinsurance arrangement in 2023, US insurance giant Progressive has successfully renewed this important protection for 2024 and also purchased a new hurricane season specific reinsurance cover already, to run from June 1st.
As we’d reported last year, Progressive had begun to record reinsurance recoveries under its aggregate catastrophe reinsurance arrangements, as the company had forecast was likely to occur.
Now, the firm’s annual filing shows that its aggregate losses exceeded the first layer annual retention threshold by $17.9 million during 2023.
That’s lower than the recoverable the insurer had been talking about after its September results, when it had said it was recording a reinsurance recoverable of approximately $21 million.
Loss quantum aside, Progressive’s annual aggregate reinsurance arrangement did what it was supposed to in 2023, paying out when the company’s losses exceeded the retention.
At the January 2024 reinsurance renewals, Progressive successfully purchased a new aggregate cover for this calendar year.
The insurer said that a new aggregate excess-of-loss program for claims occurring in 2024 was secured, with multiple layers providing for a total aggregate reinsurance coverage amount of $185 million for catastrophe event losses and ALAE.
A first retention layer threshold ranges from $450 million to $475 million, which is lower-down than the 2023 arrangement, and provides for $85 million of cover after per-occurrence deductibles of between $5 million and $7.5 million, depending on the peril covered.
There are also event caps in place, of $42.5 million or $45 million, again dependent on the peril in question.
The second retention layer threshold for 2024 sits at $525 million, providing $100 million of cover above that, with deductibles of $20 million or $25 million and caps of $175 million or $180 million, depending on the covered peril.
The first layer does not cover named tropical storms and hurricanes, while the second layer does and also features a secondary coverage part with a retention threshold of $425 million that shares the same $100 million limit and covers named storms and hurricanes only.
Also of note, Progressive had a 2023 hurricane season reinsurance cover that ran from June 1st to December 31st, which was shared limit coverage in its reinsurance program and provided $125 million in cover.
For 2024, Progressive has already purchased this hurricane season cover again, on similar terms, to run from June 1st, but this time upsized to provide $175 million in cover.
It’s also worth noting that, as we reported last month, qualifying aggregate catastrophe losses failed to reach the attachment point for one tranche of Progressive’s Bonanza catastrophe bonds, meaning the zero-coupon one-year cat bond deal was allowed to mature and investors got their full capital back.
Read all of our reinsurance renewals news.
