Reinsurance Solutions for Azerbaijan
Non-life products
Yevgen Kuznyetsov
Treaty Underwriting CEE, Hannover Rück SE
Azerbaijan International Insurance Forum 2014
Baku, 19th June 2014
Content
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Hannover Re in Azerbaijan
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Proportional vs. non-proportional
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CAT XL Treaty
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Multi-line combined per Risk / per Event XL Treaty
Reinsurance Solutions for Azerbaijan
Hannover Re in Azerbaijan
Hannover Re
• Well-diversified portfolio by lines of business and regions
• Activities in more than 100 countries
• Every country with reinsurance demand is important
Hannover Re since 2002 on the Azeri market
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Life and non-life
Facultative and Treaty
QS, Surplus, Risk XL‘s and CAT XL‘s treaties
Property, Engineering (Construction), Marine (Hull and Cargo),
Liability (General, Product, Employer‘s), Aviation
Reinsurance Solutions for Azerbaijan
Why would I need reinsurance in Azerbaijan?
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Economy is growing
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Insurance is rapidly developing
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Territory is exposed to natural perils
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One heavy Earthquake can:
• easily generate a loss ratio 3,000%
• ruin an insurance company while completely devastating its shareholder‘s capital
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Reinsurance will help you to secure the development of your business
Reinsurance Solutions for Azerbaijan
Which type of reinsurance?
Proportional
• Premiums and losses are reduced by the same percentage
• Solvency relief
• Cat components can be included
• Cover for several lines of business is possible.
Non-proportional:
• Low administrative costs: no bordereaux or quarterly accounts, less accounting
• One MDP fixed in advance
• Cover for several lines is possible (Property, Engineering, Liability)
• Combination of per Risk and per Event (single losses and accumulation of losses) in one Treaty
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Reinsurance Solutions for Azerbaijan
CAT XL Treaty
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Azerbaijan exposed to EQ, flood, landslide, hailstorm
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The coverage is compulsory by the law
Insurers face losses accumulation issue
Broad scope of damages to life & health, properties, vehicles
Net retained losses can ruin an insurance company
CAT XL
• Protection from the series of losses resulting from one nat cat event
• Two risks warranty with event definition (hours clause)
Example: AZN 9m xs AZN 1m per Event
Gross accumulated loss: AZN 5m
Net loss after application of underlying reinsurance (QS / Surplus / Risk XL): AZN 3m
Net loss after CAT XL: AZN 1m (AZN 2m of losses covered with CAT XL)
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Reinsurance Solutions for Azerbaijan
Multi-line per Risk / per Event XL Treaty
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Combined per Risk / per Event XL Treaty
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economical solution: no need for two separate treaties
per Risk + per Event combined
one treaty + several lines + one MDP
flexible structuring possible
− e.g. 1st layer per Risk only, 2nd layer per Risk/per Event, 3rd layer per Event only
Example:
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AZN 9m xs AZN 1m per Risk / per Event
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Total annual capacity of AZN 18m (with one reinstatement) for single losses and/or
series of losses
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Insurer‘s retention never exceeds AZN 1m
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Reinsurance Solutions for Azerbaijan
Reinsurance solutions
Structure with AAD
 Reinsurance
cover with the Annual Aggregate Deductible
• AZN 9m xs 1m xs AAD 1m
• Reinsurance costs are lower
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Reinsurance Solutions for Azerbaijan
Information for Reinsurer
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Risk profiles as per each line
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Territorial split of the gross and net sum insureds
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Information about underlying treaties and facultative reinsurances
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Premium income estimations
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Largest single and nat cat losses
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Reinsurance Solutions for Azerbaijan
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Thank you for your attention
Yevgen Kuznyetsov
Treaty Department Central and Eastern Europe
Hannover Re
yevgen.kuznyetsov@hannover-re.com
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