23 February 2017Insurance

Big quota shares boost growth at TransRe; GenRe partnership makes flying start

TransRe enjoyed strong growth in 2016 but this was largely driven by a one-off whole account quota share transaction and Alleghany Corporation, its parent company, stressed that it remains highly selective in the reinsurance treaties that it writes.

TransRe’s gross premiums written were $4.3 billion in 2016, an increase of 18.2 percent over the $3.7 billion reported in the previous year. Net catastrophe losses and related loss adjustment expenses were $138.6 million, $107.0 million higher than in the previous year.

The company’s underwriting results in 2016 were $260.6 million, a decrease of 20.3 percent from the $327 million of underwriting profits reported in 2015, and the combined ratio was 93.3 percent compared with 89.5 percent in 2015.

Some of this increase was offset by favourable prior year reserve development, which was $293.5 million in 2016 compared to $208.3 million in 2015. Alleghany said it continues to believe that TransRe remains strongly reserved.

Its parent also stressed that the vast majority of TransRe’s top-line growth in 2016 was related to a large whole account quota share transaction that TransRe wrote in late 2015. “Faced with an increasingly competitive market for reinsurance, TransRe’s strategy has been to both reduce and diversify the risk intensity of its reinsurance portfolio by writing whole account transactions and non-traditional risks such as mortgage reinsurance,” said Weston Hicks, the president of Alleghany.

He continues: “TransRe continues to be highly selective in the reinsurance treaties that it writes. Submission count has remained strong, but TransRe will only bind business that has a high probability of producing an underwriting profit. Mike Sapnar and his team continued to innovate in 2016 and strengthened TransRe’s position as one of the world’s premier global professional reinsurers.”

He also noted that the highlight of the year was the five-year exclusive broker market underwriting relationship formed with General Reinsurance in which TransRe manages GenRe’s broker market treaty business in the US and Canada. He said the relationship has already resulted in TransRe binding over $150 million of projected premiums for GenRe.

He added that TransRe continues to participate in and utilize the emerging non-traditional reinsurance market through TransRe Capital Partners, which was formed in 2013 to bring together all of the company’s relationships with third party capital providers under the management of one team.

TransRe Capital Partners now manages approximately $500 million in sidecar support, and places a significant amount of business through retrocessions with third party capital providers.

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Alternative Risk Transfer
23 February 2017   Weston Hicks, the president of Alleghany Corporation, which owns TransRe, has said that cracks are starting to appear in the foundations of the property/casualty industry and stressed that the so-called alternative reinsurance markets remain untested in the aftermath of a big loss warning that the industry may have created a monster.