Ceding Company
Perspective
Reaching new heights
Contents
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Motivation for buying
Structures
Relationships matter
Increased Expectations of Brokers
Educating Internal Constituents
Tradeoffs
Data
Motivation For Buying
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Reduce Risk of Ruin
Stabilization of LR
Meet regulatory Requirements
Rating Agency Concerns
Large line capacity
UW help
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Product/price
Audits
Feedback on certain classes of business or new states
Training
• Claims help on large losses
• Financing (Surplus relief)
Possible Reinsurance Structure
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Property Catastrophe
Working Layer
Umbrella
Fac
Quota Share
Aggregate Stop-Loss
Relationships Matter
• Better advice and service from
intermediaries if they know you well.
• Pay more for “carve out” if “value-added”
services are worth it.
• Property Cat, Working Layer Negotiations
– Pricing differentials - important
– Capacity (next hard market) - priceless!
Carving out…
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Better to include umbrella in
casualty/clash treaty, or carve out?
Save $ this year?
Risk “mucking up” experience rating on
your casualty treaty?
Value-added services?
Balance relationships?
How soft is the market currently?
Carve out Umbrella?
What if your umbrella reinsurer provided…
• Great sounding board for UW’s on day-to-day account
discussions
• Help with UW audits
• Training sessions for new underwriters
• “Advanced Topic” training
• Speakers for UW Conference
• Research for new state expansion
Would you still want to put your umbrella in your
casualty treaty?
Relationships Matter
Words are easy, like the wind;
Faithful friends are hard to find.
- William Shakespeare
What we look for in a broker
“Any chimp can place
reinsurance”
Increased Broker Expectations
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Cat, Terrorism, WC modeling
Rating agency advisory
ERM
Contract wording
Claims
Market Security analysis
Competitive intelligence / Research
Expansion ideas
Need to Educate
• How involved is Sr. Management and/or
the Board?
• Risk of ceding too much
– Cede too much profit to avoid volatility
– In reinsurers’ (and brokers’) best interest to
share worst case scenarios since reinsurance
is a “fear-based buy”
• Risk of not ceding enough
Tradeoffs
• “Don’t cede too much
of our profit, but
smooth out the
volatility.”
• “We want higher rated
markets on our
program…but don’t
want to pay more.”
Data
"Everything should be made
as simple as possible, but not
simpler."
-- Albert Einstein
What companies hope reinsurance u/w’s remember:
Ask good questions to assess our true risks, but...
• Differentiate between different types of companies.
• Give my companies’ experience enough weight.
• Understand the law of diminishing returns.
• Use common sense.
Thank you - End Slide
Reaching new heights