The Australian Reinsurance Pool Corporation (ARPC) has reduced its capacity after cutting this year’s retrocession program to save money.

Following negotiations with reinsurers, a $2.9 billion program with an excess of $400 million has been agreed.

This is down from the previous $3.2 billion program – with a $360 million excess – “to meet a reduced expenditure budget” this year.

The ARPC’s overall capacity, which includes the $10 billion Commonwealth guarantee, has dropped to $13.3 billion from $13.6 billion.

COO Fran Raymond says the ARPC is satisfied with the new arrangement.

“[The] capacity covers the vast majority of all probable maximum losses resulting from conventional blast scenarios,” she told insuranceNEWS.com.au.

Publication of a Treasury review of the ARPC’s future, held every three years, is pending.

The pool was established in 2003 to tackle a global withdrawal of terrorism insurance after the September 11 2001 attacks on the US.