Assurant, a provider of specialized insurance and insurance-related products and services, has completed the structure of its 2010 property catastrophe reinsurance (CAT) program.
Assurant has said that a disciplined risk management approach has been used to structure its CAT program, considering the multiple factors in evaluating the estimated loss potential from various perils, including the cost efficiency of the reinsurance coverage purchased and the credit quality, financial strength and claims paying ability of the reinsurers in the program.
According to the Assurant, the 2010 CAT program consists of three elements. The first element is the Florida Hurricane Catastrophe Fund (FHCF), which offers Florida-specific coverage for 90% of losses up to $315m in excess of a $119m retention.
The second piece is the per-occurrence catastrophe coverage that provides protection of up to $1.13bn in excess of a $155m retention. The coverage is structured in six layers. Assurant has a 20% co-participation in the fifth layer and a 67.9% co-participation in the sixth layer. In the event of Florida hurricanes, Assurant’s CAT program for per-occurrence coverage is net of any reimbursements from the FHCF.
The third piece of the program consists of second and third event coverage in the event of multiple storms. This second and third event coverage lowers the program retention to $100m subsequent to the first event and provides for a maximum recovery of $55m for the second and third event. As is the case with the per-occurrence CAT coverage, this coverage is net of any reimbursements from the FHCF.
Gene Mergelmeyer, president and CEO of Assurant Specialty Property, said: We successfully placed the CAT program this year and were able to further diversify our program and secure additional multi-year, collateralized reinsurance coverage through a new issue of catastrophe bonds, Assurant’s comprehensive CAT program maintains the same deductible as last year while strengthening coverage at an attractive rate.