The panel of reinsurers providing the Federal Emergency Management Agency’s (Fema) flood reinsurance placement underwent a slight reshuffle at the 1 January renewal with QBE Re and MAP Syndicate 2791 withdrawing from the programme.
In QBE Re and MAP Syndicate 2791’s place came Antares Syndicate 1274 and Navigators US, documents seen by The Insurance Insider show.
Although QBE Re and MAP Syndicate 2791 did not renew terms on the coverage, 28 carriers continue to sit on Fema’s reinsurance placement, which protects against losses incurred by the National Flood Insurance Program.
Although two new companies have taken positions on the reinsurance programme, for the current year there has been a reduction in the amount of limit purchased by Fema.
The January 2018 placement saw Fema secure $1.46bn in reinsurance protection from 28 carriers while paying a premium of $235mn for the coverage. That compares with the 2019 placement in which Fema purchased $1.32bn of protection and paid a premium of $186mn.
However, the $500mn catastrophe bond that Fema purchased last year with support from Hannover Re has bolstered the current year’s placement.
As Fema explained in August, the catastrophe bond provides Fema with $500mn of capital markets-backed reinsurance protection for a period of three years from 1 August, 2018.
The catastrophe bond provides protection equal to 3.5 percent of any losses between $5bn and $10bn, and 13 percent of losses between $7.5bn and $10bn. Fema paid $62mn in premium for the first year of coverage provided by the catastrophe bond.
“For the 2019 hurricane season, Fema has transferred $1.82bn of the NFIP’s flood risk to the private sector,” a Fema spokesperson told The Insurance Insider in an email.
“This is a combination of its August 2018 capital markets reinsurance placement and its January 2019 traditional reinsurance placement. If a named storm flood event is large enough to trigger Fema’s reinsurance agreements (ie, a named storm flood event where NFIP claims exceed $5bn), Fema would receive payments under both reinsurance agreements,” the spokesperson added.