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Ceding Company Considerations

Ceding Company Considerations. William Blatcher, CFA AEGIS Insurance Services, Inc. 2006 Seminar on Reinsurance New York Hilton June 1 – 2, 2006. AEGIS Background. Mutual insurer to the US utility industry Excess & surplus lines writer Excess liability D&O Workers’ comp Property

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Ceding Company Considerations

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  1. Ceding Company Considerations William Blatcher, CFA AEGIS Insurance Services, Inc. 2006 Seminar on Reinsurance New York Hilton June 1 – 2, 2006

  2. AEGIS Background • Mutual insurer to the US utility industry • Excess & surplus lines writer • Excess liability • D&O • Workers’ comp • Property • Bermuda domicile, US tax payer • Broker market customer • Various reinsurance programs

  3. You've Determined a Need for Reinsurance • Expanding limits • Supporting a new LOB (surplus relief, underwriting expertise) • Protecting aggregates • Smoothing results

  4. Broker • Advantages • Objective/third party advice on servicing • Larger set of candidate markets • Portfolio of reinsurers; diversification • Negotiating leverage • Disadvantages • Extra layer of communication • Broker's incentive to get a deal done

  5. Direct • Advantages • Typically fewer participants • Closer partnership • Asset management advice • Disadvantages • Lack of diversification • Need for internal expertise in marketing program, evaluating security, servicing account • Potentially conflicting interests

  6. Structuring • What should you buy? • Retention analysis • Loss modeling

  7. Selecting Trading Partners • Availability • Accessibility • Quality • Suitability

  8. Availability • What companies are out there? • Reinsurance market is dynamic: • New entrants after major events • Reinsurer risk appetites change • Change in strategy • Downgrade

  9. Accessibility • Which companies have an appetite for our program? • Excess of loss versus quota share • Lines of business • Which companies will be willing to trade on agreeable terms? • Limited reinsurer interest in unlimited coverage, NCBs, other features

  10. Quality • Credit risk • Agency ratings • Size • Surplus • Assets • Diversification • LOB • Geographically

  11. Suitability • Willingness to pay • Views on partnership • Response to adverse outcomes • Potential for expanding relationship

  12. Presenting Your Program • Introduction to your company, book of business to be reinsured • Current status of book's underwriting • Results • Underwriting guidelines • Limits profiles • Future prospects and strategy • Historical data • Premium and loss experience • Rate changes

  13. Managing Your Program • Coordinating contract paperwork • Clearing premium transactions • Preparing account summaries • Processing claims • Maintaining the relationships • Institutional memory

  14. Thank You

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