6 January 2014ILS

Argo Group re-ups on risk transfer for 2014

In a January risk transfer blitz Argo Group International Holdings has established sidecar Harambee Re for the 2014 accident year and announced the successful placement of a series of three catastrophe bonds, which will provide $172 million of protection to its insurance and reinsurance subsidiaries through Loma Re Insurance (Bermuda) Ltd.

As with Harambee Re 2013-1 before it, the newly established sidecar will include both a reinsurance and an insurance portfolio. Reinsurance through Harambee Re will cover specific property portfolios underwritten by Bermuda-based Argo Re and Colony Specialty, Argo Group’s excess and surplus lines segment.

Argo Group president and CEO Mark Watson commented: “we are pleased to continue support of our business growth objectives through this vehicle, which is larger for 2-14 than for 2013. Harambee Re enables us to increase our underwriting capacity for key business units without adding materially to the Argo Group’s overall exposure to volatility associated with catastrophe losses.”

The Loma Re bond program, on the other hand, will protect Argo Re and other participating units against US hurricanes, earthquakes and convective storms, along with Canadian earthquakes, for a period of four years. According to Argo this transaction is one of the first in the cat bond market to offer a product with an annual aggregate loss calculation which combines an indemnity trigger mechanism for traditional insurance buisness with an index-based trigger for the reinsurance side.

Watson continued: "we are pleased to expand our participation in the ILS market as a key part of our catastrophe risk management program. The aggregate coverage and term of the Loma Re protection adds attractive stability to Argo's financial results."