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By the Numbers: Treaties on Tremor

January 13, 2020

As Tremor closes the books on 2019, we pause to take a look back at the performance our marketplace achieved for cedents.

We publicly announced top-line statistics back in December – more than 100 clients signed up on both sides of the market and more than $2 billion in priced capacity. The graph below highlights the experience of cedents who placed their treaties through Tremor, compressing the pricing and placement into a short auction that completes in less than 5 days. Tremor collects bids over a short, fixed bidding window, revealing the range of capacity available at different price points. Tremor’s matching engine subsequently identifies the best coverage and market clearing prices based on the cedent’s preferences, with final prices and lines announced within hours of the close of bidding.

Tremor's 5-Day Placement

270 Price/Quantity Points

The first thing that stands out about Tremor’s placement is that it collects an order of magnitude more pricing information than a traditional placement. In a typical brokered reinsurance placement, a handful of price points are collected during the quote phase. These are used to set firm order terms, and generally result in either an oversubscription or an unintended short placement. By comparison, on average across treaties placed to date, Tremor collected almost 300 individual price/quantity points representing firm commitments from 33 bidders over nearly $500m in capacity. Tremor’s proprietary matching engine contemplated the complex price-quantity tradeoffs in these bids to identify prices that precisely cleared the market, every time. Cedents using Tremor were guaranteed that they would never pay too much due to an oversubscription nor miss out on coverage due to an unintended short placement. Likewise, reinsurers gained unprecedented control over their allocations as they were signed lines to match precisely as indicated by the price/quantity pairs in their bids.

5 Day Placement

The second thing that stands out about Tremor is its speed. Tremor executes pricing and allocation in a fraction of the time of a traditional placement, to the benefit of everyone involved. On Tremor, all bids are submitted during a short bidding window that averaged less than 4 days for treaties to date. Next, Tremor’s proprietary matching engine runs and final allocations are announced mere hours after the close of bidding. All told, the average time to price and place a treaty on Tremor was less than 5 days, after which lines are signed immediately. By comparison, a traditional firm order terms process would require at least 4-6 weeks to identify pricing and bind final lines. Everyone benefits from a speedy placement – cedents can finalize coverage quickly, while reinsurers avoid having capital committed for a long time – in Tremor’s placements to date, capital was committed for about a day on average before final allocations were fixed.

Quality Capital and Unprecedented Access

While Tremor represents a new way to price and place reinsurance, Tremor connects a broad slice of the high quality capital available in the reinsurance industry and opens up access on both sides of the market. Cedents can directly solicit bids from nearly all of the world’s top quality reinsurance capital, with most capacity offered on Tremor being A rated or better, or fully collateralized. Similarly, traditional reinsurers and alternative capacity providers alike can effortlessly deploy their capital anywhere in the world.

Capacity Offered on Tremor

Here at Tremor these statistics excite us – they show how our programmatic trading platform turns an arduous, imprecise process into a quick and accurate one. Tremor opens transactions to the entire market to bring the best capacity to each risk and solicits detailed information about capacity pricing from everyone in order to make oversubscription, short placements, sign downs, and other inefficiencies a thing of the past. We look forward to bringing the unprecedented speed and accuracy of Tremor’s programmatic trading to more transactions in 2020 and beyond.