Travelers increases cyber quota share cession at October renewal
By Michael Loney Oct 16 (The Insurer) — Travelers has increased the proportion of its cyber premiums ceded under quota share reinsurance, in a move that will reduce net written premiums by about $230 million in 2027 and runs counter to the recent trend of falling cyber cession rates. On a results call on Friday, chief financial officer Dan Frey said: “We increased the percentage ceded to our cyber reinsurance quota share,” effective October 1. “That will reduce net written premiums by about $165 million in Q4 and by about $230 million for full-year 2027, primarily in the bond and specialty segment. We expect the impact on bottom-line earnings to be de minimis in both years,” Frey said. Cyber insurers' cessions to reinsurers had fallen in recent years from around 50%, as cedants became more comfortable with their portfolios. But, as Cyber Risk Insurer reported in September, cyber quota share cessions were expected to continue to stabilise or even reverse for certain cedants at upcoming renewals. Marsh Re said in September that the average cyber quota share cession across its client base was 39.5%. Travelers did not disclose its previous or revised cyber cession rate. Travelers execu
By Michael Loney Oct 16 (The Insurer) — Travelers has increased the proportion of its cyber premiums ceded under quota share reinsurance, in a move that will reduce net written premiums by about $230 million in 2027 and runs counter to the recent trend of falling cyber cession rates. On a results call on Friday, chief financial officer Dan Frey said: “We increased the percentage ceded to our cyber reinsurance quota share,” effective October 1. “That will reduce net written premiums by about $165 million in Q4 and by about $230 million for full-year 2027, primarily in the bond and specialty segment.
We expect the impact on bottom-line earnings to be de minimis in both years,” Frey said. Cyber insurers' cessions to reinsurers had fallen in recent years from around 50%, as cedants became more comfortable with their portfolios. But, as Cyber Risk Insurer reported in September, cyber quota share cessions were expected to continue to stabilise or even reverse for certain cedants at upcoming renewals. Marsh Re said in September that the average cyber quota share cession across its client base was 39.5%.
Travelers did not disclose its previous or revised cyber cession rate. Travelers executives were also asked about the impact of AI on the cyber line. Bond and specialty president Jeffrey Klenk noted that the Travelers Business Risk Index showed that cyber was one of the most important issues facing customers. “It's a dynamic exposure...
and there's no question that the advanced AI models are adding to that dynamic,” he said. Klenk said Travelers' portfolio was heavily weighted toward middle-market and Main Street businesses. Klenk said a substantial majority of Travelers' cyber limits were $1 million or less, while accounts above that level were predominantly capped at $5 million or less before reinsurance. Cyber had “always been one of our most heavily reinsured lines of business”, he added.
Klenk added that Travelers had invested heavily in risk-control capabilities, including through its acquisition of cyber insurtech Corvus, which completed at the start of 2024.