Ceding Company
Considerations
William Blatcher, CFA
AEGIS Insurance Services, Inc.
2006 Seminar on Reinsurance
New York Hilton
June 1 – 2, 2006
AEGIS Background
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Mutual insurer to the US utility industry
Excess & surplus lines writer
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Excess liability
D&O
Workers’ comp
Property
Bermuda domicile, US tax payer
Broker market customer
Various reinsurance programs
You've Determined a Need for
Reinsurance
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Expanding limits
Supporting a new LOB (surplus relief,
underwriting expertise)
Protecting aggregates
Smoothing results
Broker
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Advantages
Objective/third party advice on servicing
 Larger set of candidate markets
 Portfolio of reinsurers; diversification
 Negotiating leverage
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Disadvantages
Extra layer of communication
 Broker's incentive to get a deal done
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Direct
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Advantages
Typically fewer participants
 Closer partnership
 Asset management advice
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Disadvantages
Lack of diversification
 Need for internal expertise in marketing program,
evaluating security, servicing account
 Potentially conflicting interests
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Structuring
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What should you buy?
Retention analysis
Loss modeling
Selecting Trading Partners
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Availability
Accessibility
Quality
Suitability
Availability
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What companies are out there?
Reinsurance market is dynamic:
New entrants after major events
 Reinsurer risk appetites change
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Change in strategy
 Downgrade
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Accessibility
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Which companies have an appetite for our
program?
Excess of loss versus quota share
 Lines of business
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Which companies will be willing to trade on
agreeable terms?
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Limited reinsurer interest in unlimited coverage,
NCBs, other features
Quality
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Credit risk
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Agency ratings
Size
Surplus
 Assets
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Diversification
LOB
 Geographically
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Suitability
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Willingness to pay
Views on partnership
Response to adverse outcomes
Potential for expanding relationship
Presenting Your Program
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Introduction to your company, book of business to be
reinsured
Current status of book's underwriting
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Results
Underwriting guidelines
Limits profiles
Future prospects and strategy
Historical data
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Premium and loss experience
Rate changes
Managing Your Program
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Coordinating contract paperwork
Clearing premium transactions
Preparing account summaries
Processing claims
Maintaining the relationships
Institutional memory
Thank You