Loss waterfall order

How losses flow through Re's capital structure.

As mentioned earlier, Re’s capital stack consists of three components:

• reUSD: the senior layer. The most loss-remote, but earns less rewards than reUSDe.

• reUSDe: the mezzanine layer. Takes on more risk than reUSD, but earns greater potential yield in exchange.

• Re capital: the junior layer. Re’s accumulated capital and reserves, which shield reUSD and reUSDe from losses.

Reinsurance premiums serve as a default foundational layer for any reinsurer; claims and expenses are always paid out of premiums, with additional capital only drawn upon if losses are significantly greater than expected (that is, they exceed premiums). To put it simply, losses flow from the bottom up. In the event that Re’s Combined Ratio exceeds 100, Re capital absorbs the losses before reUSDe endures losses; should an extreme event bring about losses to reUSDe, it’ll absorb further losses before reUSD is impacted.

Impairment of reUSD would require Re to operate at a Combined Ratio of 135%. That is a 0.03% probability event, roughly 15 times less likely than the one-in-200 scenario that regulatory collateral requirements are based on. It is also a far cry from the 92% Re has run across all lines of reinsurance to date (as of June 2026). Re keeps its Combined Ratio profitable by sticking to lines with minimal catastrophe exposure and long histories of stable results. Catastrophe lines can pay more, but they can also lose far more. Hurricane, flood, and wildfire books have posted Combined Ratios near 150% in bad disaster years.

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