Item 8.01. Other Events.
On
2021 Catastrophe Reinsurance Program Summary
The Company continued to optimize its program to address both frequency and
severity by reducing its retention to
2021 U.S. Program Key Highlights
•TheU.S. Program provides$965 million of coverage(1) in excess of a$80 million retention for a first event, with retention lowering to$55 million for a second and third event(2). Coverage protects against a projected probable maximum loss of approximately a 1-in-174-year storm, based on projected modeled loss estimates(3). •When combined with theFlorida Hurricane Catastrophe Fund , theU.S. Program protects against grossFlorida losses of up to approximately$1.2 billion . •Overall, the majority of Assurant's business is not exposed to catastrophe losses and therefore, combined with the comprehensive 2021 catastrophe reinsurance program, the Company would expect to retain approximately 70% of net operating income in a 1-in-50-year event compared to approximately 40% in 2017. •Multiyear reinsurance contracts now cover approximately 52% of theU.S. Program, reducing volatility in future reinsurance costs. •Layers 2 through 6 allow for one automatic reinstatement; Layer 1 has two reinstatements. •Maintains unique cascading feature that provides multi-event protection in which higher coverage layers (Layers 2 through 6) cascade down to$110 million as the lower layers and reinstatement limits are exhausted. •2021 reinsurance premiums for the total program are estimated to be approximately$149 million pre-tax(4) based on current estimated exposure. •Coverage was placed with more than 40 reinsurers that are all rated A- or better byA.M. Best . -2-
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(1)The 2021 Catastrophe Reinsurance Program also includes coverage in theCaribbean of up to$150 million in excess of$20 million , and the Company's 2021Latin America protection of up to$158 million in excess of$7 million which will renew in full onAugust 1, 2021 . Renewals are subject to changes in coverage amount, retention and cost. (2)Retention for second and third events is$55 million for hurricane and earthquake perils only, with the additional layer as part of a flexible limit that can be used for either$25 million in excess of$55 million or$50 million in excess of$915 million . (3)Probable Maximum Loss is projected based on estimatedDecember 31, 2021 exposure and a blend of industry modeling tools. Actual losses may differ materially from projections. (4)Actual reinsurance premiums will vary if exposure changes significantly from estimates or if reinstatement premiums are required due to catastrophe events. Total pre-tax dollar amount includesCaribbean andLatin America coverage. (5)The risk retained by the Company for theFlorida Hurricane Catastrophe Fund ("FHCF") is applied to the mainU.S. Program retention. The FHCF inures to the benefit of the mainU.S. Program. Once exhausted, there is no reinstatement of the FHCF coverage. -3-
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Cautionary Statement
Some of the statements included in this Form 8-K may constitute forward-looking
statements within the meaning of the
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Exhibit The cover page from this Current Report on Form 8-K, formatted in Inline 104 XBRL. -4-
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