Selective adds $200mn of limit and personal lines buy-down to cat program

By Chris Munro

Jan 30 - (The Insurer) - Selective bought another $200mn of limit and added a new personal lines-only buy-down layer to its property catastrophe reinsurance program at 1 January, while the carrier confirmed its Hurricane Helene loss estimate “has held up well” and said its California wildfire losses will be minimal.

On a call with analysts to discuss Selective’s Q4 2024 and full-year earnings, the company’s chief financial officer Patrick Brennan provided details on the firm’s recently renewed catastrophe reinsurance program.

Brennan said Selective had maintained its $100mn retention on the program but raised the coverage’s exhaustion point to $1.4bn from $1.2bn.

“The increased limit reflects the growth in our book's total insured value,” Brennan explained.

The top layer of Selective’s program is 75 percent collateralised and provides $600mn of coverage in excess of an $800mn retention.

“With attractive market conditions, we completed the renewal with risk-adjusted price decreases and improved terms and conditions,” said Brennan.

The new personal lines-only buy-down layer attaches at a slightly lower return period than Selective’s broader catastrophe program, he said.

The layer provides Selective with additional protection as the company transitions to the mass affluent market, the CFO noted.

“Our peak peril US hurricane is well within our risk tolerance, at 4 percent of GAAP equity for a 1-in-250-year net probable maximum loss,” Brennan added.

On the call, Brennan said the $85mn pre-tax estimate for Hurricane Helene losses that Selective announced in October “has held up well”.

The executive also noted that with no personal lines or standard commercial exposure in the Golden State, “the devastating Los Angeles and Southern California wildfires will not significantly impact our first quarter results”.