FloodRe has completed the first stage of the process to secure outward reinsurance protection, in one of the world’s largest global programmes.
The three-year programme is one of the five largest ‘natural peril’ reinsurance deals globally and second in Europe. Industry reinsurers have collectively offered £1.29 billion of cover a year, with Munich Re and Swiss Re contributing significant support.
The procurement process involves reinsurance broker Guy Carpenter and has now entered its second phase, with a further £720 million of reinsurance protection being sought.
The second phase is expected to close in January 2016, which will ensure that Flood Re is on track to accept its first policy in April 2016 after UK flood minister Rory Stewart signed the regulation approving Flood Re in early November.
Brendan McCafferty, chief executive of Flood Re, commented: “The successful completion of phase one of the reinsurance procurement process is an important milestone on the road towards Flood Re becoming a reality.”
“We are delighted by the strong demand within the reinsurance market, which saw the programme being significantly oversubscribed. This bodes well for phase two and means we are on course to provide protection up to the planned £2.1 billion annual liability limit.”
He added: “Flood Re is a complex scheme and while we are pleased with the progress which is being made, we are not complacent. Plenty of hard work remains ahead of us.”
“Over the next few months we need to ensure that every insurer who wishes to test with Flood Re is able to do so, that we successfully complete phase two of the reinsurance process and that we continue to work closely with the financial regulators.”
In July, Flood Re submitted an application for authorisation to the UK’s financial regulators.
