Palomar adds $200m to reinsurance tower, renews cat bond
Palomar Holdings, a specialty property insurer operating in the US and Bermuda, has completed reinsurance programmes renewing and incepting at June 1, 2019.
Palomar renewed $470 million of its core reinsurance programme, inclusive of its catastrophe bond Torrey Pines Re, and purchased $200 million of incremental limits at the top of its reinsurance tower.
The company’s reinsurance programme now provides coverage of up to $1.05 billion for earthquake events.
Palomar explained that the incremental limit allows it to maintain a cushion above the 1:250 year peak zone probable maximum loss and significantly exceeds simulated losses from any recorded historical event.
“As of March 31, 2019, a theoretical earthquake equivalent to the 1994 Northridge or 1906 San Francisco earthquake would generate a gross loss of $669 million or $580 million, respectively,” Palomar said in a statement.
Torrey Pines Re provides Palomar with indemnity based reinsurance covering multiple perils, and is designed to fit into Palomar’s existing traditional reinsurance programme.
“We are very pleased to successfully complete our 6/1 renewal,” commented Mac Armstrong, CEO and founder. “We were able to procure an incremental $200 million of limit to buttress our growth with the requisite reinsurance capital, preserve our retention at $5.0 million per event and introduce a well-received new quota share and excess of loss program in the SHF. The SHF is emblematic of our strategy of generating a balanced combination of fee and underwriting income.”
Armstrong continued: “This renewal cycle has seen prices tighten and we are thrilled that our non-loss affected layers of reinsurance renewed flat to modestly up on an exposure adjusted basis. Our loss impacted layer, a $10.0 million layer of wind-only coverage attaching at excess of $5.0 million, did see an increase of approximately 15 percent. Our renewal pricing is a testament to the unique attributes of our program and the historical results we have generated for our reinsurance partners.”
