S&P’s new capital model has meaningful implications on insurers’ reinsurance purchase decisions. Given changes to debt-funded capital credit and other capital adjustments, generally higher underwriting capital factors, enhanced diversification benefits, and varying natural catastrophe return period requirements, insurers should re-assess the cost/benefit of their current reinsurance programs. Capital relief structures such as quota shares and legacy covers that target capital intensive lines of business as well as increased catastrophe limit may offer substantial S&P capital relief.

S&P Capital Model Update

S&P’s new capital model has meaningful implications on insurers’ reinsurance purchase decisions. Given changes to debt-funded capital credit and other capital adjustments, generally higher underwriting capital factors, enhanced diversification benefits, and varying natural catastrophe return period requirements, insurers should consider whether to re-assess the cost/benefit of their current reinsurance programs. Capital relief structures such as quota shares and legacy covers that target capital intensive lines of business as well as increased catastrophe limit may offer substantial S&P capital relief.

Learn more about these changes here (opens a new window)

Contacts

Placeholder image

Paul Hyer

Ratings Advisory Lead
phyer@lockton.com
+1 612 219 8170

Placeholder image

John Mercer

Business Intelligence Lead
jmercer@lockton.com
+1 646 530 1803

Lockton Re's latest content

Lockton Re, the reinsurance business of the world’s largest privately held independent insurance broker, is pleased to announce the launch of Lockton Re Portfolio Solutions, a business segment dedicated to Programs and MGAs in the U.S. Lockton Re Portfolio Solutions Launched to Deliver Specialized Programs and MGA Expertise

Lockton Re Moves into New Office at 261 5th Avenue, New York

We are excited to announce that we have expanded our New York City headquarters and officially moved into our new office located at 261 5th Avenue, New York, NY 10016.We are excited to announce that we have expanded our New York City headquarters and officially moved into our new office located at 261 5th Avenue, New York, NY 10016.

Lockton Re Continues to Build out Capital Advisory Capability with Appointment of Sabrina Veau

Lockton Re Continues to Build out Capital Advisory Capability with Appointment of Sabrina VeauLockton Re Continues to Build out Capital Advisory Capability with Appointment of Sabrina Veau

New Lockton Re Report: An Inflection Point in the US Casualty Reserving Cycle - Highlights Potential End to Material Adverse Development in Casualty Lines for Calendar Year 2025

Lockton Re, the reinsurance business of the world’s largest privately held independent insurance broker, today launches a new report - An Inflection Point in the US Casualty Reserving Cycle, which discusses trends that indicate we may be close to turning the page on additional reserving for recent soft market years in US Casualty (Re)insurance as an industry. Lockton Re, the reinsurance business of the world’s largest privately held independent insurance broker, today launches a new report - An Inflection Point in the US Casualty Reserving Cycle, which discusses trends that indicate we may be close to turning the page on additional reserving for recent soft market years in US Casualty (Re)insurance as an industry.
Read more news and insights

We're here to help

We bring creative thinking and an entrepreneurial spirit to the insurance business and are uniquely positioned to help you succeed.

Ask an Expert