There have been progressive increases in both individual club retentions and the limits collectively insured by the Pool.

The graph below shows this development, outlining increases in individual club retention and Pool layers from 1991 to 2016 (and our expectation for 2017).

Increased retentions both by the individual clubs and the IG Pool have exacerbated the impact of large claims volatility. Since 1991 the maximum Pool limit has increased from USD 10.4 million each claim (in excess of a USD 1.6 million individual club retention) to the current limit of USD 70 million each claim (in excess of a USD 10 million individual club retention).

In addition to the Upper Pool, Hydra (the IG Captive) also reinsures 100% of IG reinsurance layer USD 20 million excess USD 80 million, plus 30% of USD 480m excess of USD 100 million.

The 2017/18 combined catastrophe exposure under the Pool and Hydra is now USD 231 million each event (just 6 years ago this combined catastrophe exposure would have only been USD 167 million). This increase in the maximum Pool exposure inevitably increases the potential for erratic results. Despite the reinsurance of Hydra, which moderates the volatility, the exposure is still considerable.