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Palomar Aspiring To Underwrite “Uncorrelated” Reinsurance

Palomar Aspiring To Underwrite “Uncorrelated” Reinsurance

Palomar Aspiring To Underwrite “Uncorrelated” Reinsurance

Palomar Aspiring To Underwrite “Uncorrelated” Reinsurance

The California-based specialty insurer Palomar Holdings, which mostly offers catastrophe-exposed property coverage, intends to start underwriting some reinsurance lines that are “uncorrelated” with the rest of its portfolio.

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The company, which focuses on markets it believes are underserved, is a top insurer of residential and commercial property susceptible to earthquakes in the United States. It also writes businesses exposed to hurricane and flood risks.

It appears that the company has recognized an opportunity to insure a business that is diversifying and that could generate complementary sources of a risk premium as it expands its balance sheet.

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Part of this includes a plan to underwrite outwards reinsurance business, Reinsurance News has now learned.

Palomar Aspiring To Underwrite “Uncorrelated” Reinsurance

Palomar is considering underwriting certain reinsurance lines of business that would be uncorrelated with the core primary insurance exposures that the company underwrites.

The insurer believes it has identified a number of areas it feels it can participate in the reinsurance market, focusing on “uncorrelated exposures” at what it calls “compelling economics”.

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Given the hardening of reinsurance pricing, as we swiftly approach the key January renewals, the market looks set to offer attractive opportunities to companies that have the additional capacity they can deploy.

With reinsurance capacity estimated to have reduced through 2022, while reinsurer appetites have also been adjusting, this could position a company like Palomar well to capitalize on reinsurance underwriting opportunities that could emerge, and that provide diversifying and complementary sources of revenue to its business.

Palomar Aspiring To Underwrite “Uncorrelated” Reinsurance

The company is understood to be involved in conversations with trading partners about beginning this incremental outwards reinsurance underwriting, although at this stage we don’t know when Palomar plans to start this latest expansion of its business.

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Current reinsurance market conditions mean that an underwriter such as Palomar can look to capitalize on the increasing demand for coverage, at a time when market capacity has reduced, in order to secure attractive and incremental opportunities for itself.


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