AmTrust Financial Services signed a new quota share reinsurance contract intended to reduce hurricane and tropical storm exposure for its Republic Companies business.
The contract, effective Aug. 1, addresses catastrophe and non-catastrophe events, and has a 62.5 percent cession rate covering the personal property policies at Republic. AmTrust added that “multiple unrelated reinsurers” participated.
According to AmTrust, the new quota share contract is designed to work with its existing excess of loss reinsurance programs on catastrophe and non-catastrophe events. It’s designed to help reduce AmTrust’s exposure to and lessen financial volatility concerning catastrophe perils including hurricanes and tropical storms.
AmTrust said its excess of loss reinsurance programs as of July 1 provided catastrophe cover for losses in excess of $20 million, with a per event limit of $830 million. Its additional 62.5 percent property quota share treaty covers Republic’s personal lines property business to help further reduce AmTrust’s net catastrophe exposure.
Barry Zyskin, AmTrust’s chairman and CEO, said in prepared remarks that the action regarding its Republic business follows a previously stated plan to reduce its Republic book volatility, even though “property represents a small portion of our overall portfolio from a premium standpoint.”
In July, AmTrust inked a reinsurance agreement with Premia Reinsurance Ltd., addressing loss reserve development up to $400 million over the company’s stated reserves of $6.59 billion as of March 31, 2017. The arrangement is designed to help AmTrust insulate itself from future reserve volatility.
AmTrust’s reinsurance deal for its Republic Companies business comes in the wake of Hurricane Harvey’s historic collision with coastal Texas and Louisiana. AmTrust said the net impact from Harvey should not exceed $20 million.
AmTrust reported $5.8 million in 2017 second quarter net income, versus $127.2 million over the same period in 2016. While premium volume grew, its combined ratio hiked up to 101.2 for the second quarter, well above its 91.3 combined ratio booked in Q2 2016.
Source: AmTrust Financial Services