Travelers ups catastrophe XoL reinsurance cover for 2025 with higher retention

US primary insurer Travelers has raised the retention limit of its catastrophe excess-of-loss (XoL) reinsurance treaty for 2025 by $500 million.

The 2025 treaty, which covers the accumulation of certain property losses arising from one or more occurrences, provides for recovery of up to $3.675 billion (a slight increase from last year) as part of $4 billion in qualifying losses covered by the treaty, in excess of a $4 billion retention.

As Reinsurance News understands, qualifying losses for each occurrence are calculated after a $100 million deductible, which is the same as in the 2024 treaty.

A notable difference from the 2024 treaty is that the top layer is now 100% placed, whereas in 2024, it was only 50% placed due to some co-participation.

In addition to this XoL reinsurance treaty, Travelers noted that several other catastrophe reinsurance agreements remain in effect as of January 1, 2025.

These include the reinsurance agreement related to the Catastrophe Bonds (Long Point Re IV), the Personal Insurance Hurricane Catastrophe Excess-of-Loss Reinsurance Treaty, the Northeast Property Catastrophe Excess-of-Loss Reinsurance Treaty, the Middle Market Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty, the Personal Insurance Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty, the Canadian Property Catastrophe Excess-of-Loss Reinsurance Treaty, and various Other International Reinsurance Treaties.

Earlier today, Travelers reported net income of $2.1 billion for Q4’24 and $5 billion for the full year 2024, compared with $1.6 billion and $3 billion, respectively, in 2023.

Travelers’ underwriting performance also improved considerably year over year, rising from $412 million to $1.8 billion in Q4 ’24 and by more than $2 billion to almost $3 billion for the full year 2024.

This occurred despite a rise in catastrophe losses, net of reinsurance, to $175 million for the quarter and to $3.3 billion for the full year, compared with $125 million and $3 billion, respectively, in the prior year.

The rise in cat losses during both periods was more than offset by a $130 million rise in net favourable prior year reserve development in Q4’24 to $262 million, and an increase of $566 million to $709 million for the full year.

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