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FEMA cranes 28 reinsurance companies for NFIP



The Federal Emergency Management Agency has returned to the reinsurance market to restore the National Flood Insurance Program and dropped 28 reinsurance companies for a $ 1.32 billion program, FEMA said in a statement Wednesday.

The one-year period became effective Jan. 1, covering parts of NFIP losses over $ 4 billion arising from a single flood event, said the statement, adding that FEMA paid a total of $ 186 million for the coverage.

When this threshold is reached, the reinsurance will cover 14% of losses between $ 4 billion and $ 6 billion, 25.6% of losses between $ 6 billion and $ 8 billion and 26.6% of losses between $ 8 billion and $ 10 billion, the statement says.

The program joins $ 500 million FloodSmart Re $ 500 million Series 201

8-1 Notes, FEMA's first disaster bond, was invested in the capital market in July.

Businesses give the agency's total transfer to $ 1.82 billion of NFIP's flood risk for the 2019 hurricane season to the private sector, the statement said, adding that if a navigated storm surge event is large enough to trigger both reinsurance contracts, FEMA receives payments under both reinsurance agreements.

"By reinsurance, FEMA collaborates with private markets to build a pillar that supports a sound financial framework for NFIP through meaningful transfer of the flood risk," said David Maurstad, CEO of the National Flood Insurance Program, in the statement.

FEMA used Guy Carpenter & Co. LLC, a subsidiary of Marsh & McLennan Cos. Inc., a broker and Aon PLC for financial advisory services for the placement, said the statement.

                    


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