UnipolRe pulls out of cat XoL market citing climate change
UnipolRe has pulled out of writing property cat excess-of-loss business as it became the first reinsurer to fully exit the class based on the impact of climate change, Insurance Insider can reveal.
Sources told this publication that Dublin-based UnipolRe had told its clients yesterday that it was discontinuing writing the book of business.
"UnipolRe views climate change as a systemic and significant risk and we consider that the modelling tools currently available do not adequately reflect the impact of climate change going forward," the company said in a circular.
The note from CEO Marc Guy Victor Sordoni went on to say that his firm had observed an increased frequency of events and expected "this trend will continue into the near future across the territories within our geographical scope".
As a result, the firm has decided to cease underwriting non-proportional property excess-of-loss treaties with exposure to natural perils on an occurrence basis, it said.
The cat market has faced a period of elevated loss activity stretching back to 2017 as a result of the high frequency of small to medium-sized cats, with that run set to continue in 2021 with another $80bn+ year.
The major losses this year include Bernd, which could ultimately cost European insurers and their reinsurers ~EUR15bn ($17bn).
Reinsurers are grappling with questions around how they understand, model and price cat risk.
A number of reinsurers in recent days have said that they will look to dial down cat risk as they seek to control volatility.
UnipolRe was established in late 2014 by UnipolSai Assicurazioni, one of Europe's largest non-life insurers. Headquartered in Dublin, its stated client base is small to medium-sized insurance companies in Europe.
Other classes of business written by the reinsurer include motor, general liability, personal accident and life.
The company could not immediately be reached for a response.