P&I without the British accent
Hydra
Hydra Insurance Company Limited ("Hydra") is a segregated accounts company incorporated under the laws of Bermuda in which each Club is an Account Owner. Hydra reinsures, via segregated accounts, the following elements of the International Group's P&I risks:
- the Upper Pool, i.e., $20 million xs $30 million, being excess of the lower pool and individual Club's retentions;
- The Clubs' coinsurance of 25% of the First Excess Layer of the general excess of loss contract (25% of $500 million xs $50 million). Hydra partially protects this latter exposure with a stop loss policy.
This vehicle will enable the Clubs to increase their risk retention in the future and thus reduce their dependence on the commercial reinsurance market.
Financial statements for Hydra are not readily available, however in April 2007 the International Group was required to inject a further $50 million into Hydra in order to recapitalize it and for it to meet local statutory capital requirements. Incurred claims costs in Hydra in 2005 and 2006 amounted to $162 million, which exceeded the $119 million premium ceded to it. Accordingly, an injection of $50 million contributed surplus was called for.