International Group Pool and Reinsurance arrangements

2021/22 Pool and GXL Reinsurance contract structure

The structure of the Group’s claims-sharing arrangements (the “Pool”) and the commercial market and captive (Hydra) reinsurance arrangements for the 2021/22 policy year are depicted in the diagram below.

The Pool is structured in three layers from US $10 million to US $100 million. Excess of US $30 million, the Pool is reinsured by the Group captive reinsurance vehicle, Hydra Insurance Company Limited. Hydra is a Bermuda incorporated Segregated Accounts company in which each of the 13 Group Clubs has its own segregated account (or “cell”) ring fencing its assets and liabilities from those of the company or any of the other Club cells. Hydra reinsures each Club in respect of that Club's liabilities within the Pool and reinsurance layers in which it participates. Through the participation of Hydra, the Group Clubs can retain, within their Hydra cells, premium which would otherwise have been paid to the commercial reinsurance markets.

The annual Group General Excess of Loss (“GXL”) reinsurance programme attaches at the Pool ceiling of US $100 million, and provides up to US $2 billion of reinsurance cover in a three-layer structure (Layer 1 - US $650 million excess of US $100 million, Layer 2 - US $750 million in excess of US $750 million, and Layer 3 - US $600 million excess of US $1.5 billion). Hydra retains a US $100 million AAD within the 70% Market Share in Layer 1, and there are three multi-year private placements, each of which are 10% of layer 1.

A further US $1 billion of reinsurance cover (the “Collective Overspill”) is purchased by the Group to provide protection in respect of claims exceeding the upper GXL cover limit of US $2.1 billion.

Collective Overspill 600m xs 1.5Bn 750m xs 750m 70% Order - 650m xs 100m Excess of 100m AAD (for order) Pool 10% cover 650m xs 100m 10% cover 650m xs 100m 10% cover 650m xs 100m 250m xs 750m 70% Order - 650m xs 100m Excess of 100m AAD (for order) 10% cover 650m xs 100m 10% cover 650m xs 100m 10% cover 650m xs 100m Pool P&I Oil Pollution USD 3.1Bn USD 2.1Bn USD 1.5Bn USD 750m USD 100m USD 1.0Bn USD 750m USD 100m
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The Pool, the first and second layers of the GXL and the private placement participation structures for the separate oil pollution cover mirrors the main (P&I) placement up to the Oil Pollution cover limit (US $1 billion), as depicted above. For chartered entries, there is a single combined P&I and oil pollution cover limit of US$350 million. The Pool and Reinsurance layers structures for chartered entries are identical to those in place for owned entries up to the cover limit.

The Pool and Reinsurance structures are reviewed annually and any changes to the existing structures will be reported under the News section on the Group website.