RESERVING ACTUARY’S INTERACTION WITH UNDERWRITING A REINSURER’S PERSPECTIVE GARY KOUPF – EVEREST RE CLRS 2004 Uniqueness of Reinsurance • • • • No Standard Classes Unique Contracts Multiple Lines Individually Priced CLRS 2004 Some Common Elements • • • • Pro Rata vs. Excess of Loss Risk Attaching vs. Losses Occurring Occurrence vs. Claims Made Working Layer vs. High Excess vs. Clash CLRS 2004 Interaction Begins When Contract is Written • Contracts are Grouped – By Profit Center – Homogeneous as to • Expected Emergence Pattern • Rate Adequacy • Terms and Conditions – Defined by the Actuaries with U/W Input – Groups Evolve Over Time – Same Groups Used in Planning CLRS 2004 Planning Process • Projections of – Volume – ELR – Commission Ratio • Reviewed by Actuary – Documentation, Rationale, Fit With Experience • ELRs Used as A Priori Loss Ratios CLRS 2004 Reserve Study • Premium Projections – Premiums Recorded • As Deposits • As Reported – Actuary Analyzes Triangles in Reserve Study and Reviews With U/W – Integral to IBNR Estimates CLRS 2004 Reserve Study • Results Reviewed By U/W • Useful Summary Exhibits – ULRs By Year/Group – ULRs, CRs as Compared To Plan – Current ELRs and Recommended Changes CLRS 2004 Interim Analysis • Quarterly Expected vs. Actual by Group/Year • Summaries by Group and Department • Discussed/Reviewed With U/W CLRS 2004 Loss Sensitive Contracts • Contingent Commissions • Retro Premium (Swing Rated) • Rely on U/W for Identification and Terms CLRS 2004