Admiral has cancelled its reinsurance contract with Converium for its Gibraltar operation. As of 1 January 2005, Gen Re and Axis Re Europe have agreed to increase their reinsurance participation.
From January, Gen Re and Axis will up participation to 5% each of Admiral's total written premium from previously negotiated shares of 2.5% and 1% respectively in Admiral Insurance (Gibraltar) Ltd (AIGL).
Gen Re has secured a 12-month contract and Axis has secured a 24-month contract.
Admiral was able to offer Gen Re and Axis increased AIGL reinsurance capacity because it decided to exercise an option entitling it to cancel its 2005 reinsurance contract with Converium AG in the event of its credit rating falling below A-.
The terms of the enlarged Gen Re and Axis participation enable AIGL to anticipate receiving a slightly higher share of profits on ceded business in 2005/06 as a result of the decision to cancel the Converium contract.
Under these new terms, Admiral will continue to receive 100% of the earnings from the sale of ancillary products and continue to retain 100% ownership of the group's customers, the company said.
