Jonathan Gray, Chief Underwriting Officer at Pool Re, the UK’s leading terrorism reinsurer, has emphasised that while its catastrophe bond activity is smaller than the traditional retrocession programme, it remains ‘absolutely central’ to the firm’s risk protection framework.
This marked the second renewal of its landmark terrorism catastrophe bond and the third issuance in the Baltic series.
In a recent interview with our sister publication, Reinsurance News, Gray underscored the strategic significance of Baltic III, while also discussing broader topics, including the persistent “perception gap” in terrorism reinsurance.
Underlining the use of catastrophe bonds to transfer terrorism risk, the CUO said, “It’s an important vehicle for us to spread risk and protect the taxpayer from significant losses.
“We continue to use traditional retrocession, but we’re essentially at capacity in that market.
“If we’re serious about returning risk to the private sector and distancing the taxpayer from loss, we need to bring in new investors and new forms of capital.
“That’s exactly what the insurance-linked securities (ILS) market allows us to do, and future engagement in the space is definitely on Pool Re’s agenda.”
Gray also noted that, although catastrophe bonds are smaller than the firm’s traditional retrocession programme, it “doesn’t make it any less important.”
He continued, “It sits just beneath the main retrocession layer, so it’s absolutely central to our overall protection structure. “We’re very pleased to have placed Baltic III, and delighted to be back in the catastrophe bond market.”
“It also provides important diversification. This year, not only did Baltic come to market, but our colleagues in France launched their Athena bond, and we’ve also begun to see cyber transactions emerge.
Closing his thoughts on catastrophe bonds, Gray also looked ahead to other areas of risk transfer.
“Over time, I expect other non-natural catastrophe perils will follow. That diversification is something investors are very keen to explore, and from our conversations, it’s clear they see real opportunity in it,” he said.
For more insights from Gray, including the challenges businesses face in obtaining adequate terrorism insurance, you can read the full Reinsurance News interview here.
Pool Re operates as a unique public–private partnership backed by an unlimited HM Treasury loan facility, providing cover for £2.3 trillion of UK assets, spanning businesses of all sizes, from local traders and shopping centres to airports and power grids, across key sectors including real estate, retail, transport, construction, and energy.
