Pool Re and adviser Guy Carpenter expect to use the Monte Carlo Rendez-Vous to gauge interest in a potential ILS issuance, which would most likely take place in March, according to CEO Julian Enoizi.
Enoizi told this publication that Pool Re has held discussions about the prospective issue with the Prudential Regulation Authority (PRA), which last year, in conjunction with the Treasury, established a UK framework for the ILS market.
“We have found the PRA to be very supportive but it’s early days – there is a long way to go,” he said.
“Monte Carlo is coming up and that’s where we will start meeting the investors.”
He estimated the issue size at roughly £100mn ($128.7mn).
Pool Re has yet to lodge an application with the PRA to sell the securities.
The issue would be the ILS market’s first terrorism cat bond since the 2003 Golden Goal transaction, which insured international football federation Fifa against cancellation of the 2006 World Cup due to terrorism incidents.
Enoizi also estimated it may seek £100mn of protection to accommodate non-damage business interruption (BI) next year. This would be in addition to its main treaty, which renews in March.
Pool Re expects to be able to offer the BI cover on 1 January, assuming the Counter-Terrorism and Border Security Bill, which expands the pool’s mandate, becomes law.
Pool Re began investigating whether its remit should be expanded to include BI where there is no property damage after the Paris terrorist attacks in November 2015.
In March Economic Secretary to the Treasury and City Minister John Glen said the government would amend the 1993 legislation which created the pool.
The wide-ranging Counter-Terrorism and Border Security Bill, which includes the Pool Re reform, has had its second reading in the House of Commons.
“We are aiming and we are advising the insurance industry that they need to be ready to go live with this on 1 January,” he said.
“It will be an optional cover,” said Enoizi, “and we will make sure it does not go on the government’s balance sheet by reinsuring it out.”
This year Pool Re became the first national terrorism reinsurance pool to provide cover for physical damage caused by terrorist cyber attacks, or remote digital interference.
That cover is tacked onto the main Pool Re policy, though an estimated technical price increase of about 10 percent to accommodate the cyber protection was offset by an increase in member retentions.
Enoizi added: “Our overarching goal is to drive terrorism cover to affordable levels for small businesses and businesses outside London.”
With a retrocession programme of £2.1bn at the last renewal, Pool Re is the biggest buyer of terrorism cover globally.