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Insurance Company Catastrophe Strategy

Insurance Company Catastrophe Strategy. Scott Belden. Discussion Outline. Management Philosophy Financial Capacity Operating Segments - Personal Lines - Commercial Lines - Specialty/Reinsurance. Management Philosophy. Is Catastrophe Risk an “opportunity” or “a necessary evil”?

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Insurance Company Catastrophe Strategy

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  1. Insurance CompanyCatastrophe Strategy Scott Belden

  2. Discussion Outline • Management Philosophy • Financial Capacity • Operating Segments - Personal Lines - Commercial Lines - Specialty/Reinsurance

  3. Management Philosophy • Is Catastrophe Risk an “opportunity” or “a necessary evil”? • What is an acceptable “probability of ruin”? • How much tolerance is there for 1 in 100 volatility? • What return level is needed for that volatility? • How strong is the faith in models?

  4. Financial Environment • Capital and Surplus • Earnings power • Other diversifying income sources • Other demands on surplus • Access to capital • Ownership expectations

  5. Operating Segments Personal Lines - Standard Homeowners - Specialty Lines Commercial Lines - Small Standard Lines - Mid-Sized - National Schedules Specialty Lines - Excess and Specialty - Reinsurance and Retrocession

  6. Personal LinesStandard Homeowners • Strategy Considerations • Return requirements versus market price • Regulatory constraints • Pricing • Non-renewal • Coverage breadth • Agency considerations • Account rounding (with Auto) • Geographic spread • Other income sources • Reinsurance dependency • Model Usage • Portfolio level

  7. Personal LinesSpecialty Homeowners • Strategy Considerations • Admitted market versus Surplus Lines • Stand alone or packaged coverage • Distribution • Geographic spread • Reinsurance dependency • Model Usage • Portfolio level • Possibly individual risk

  8. Commercial LinesSmall Business • Strategy Considerations • Return requirements versus market price • Package policy coverage • Coverage extensions • Agency considerations • Geographic spread • Reinsurance dependency • Model Usage • Portfolio level

  9. Commercial LinesMiddle Market • Strategy Considerations • Return requirements versus market price • Coverage breadth • BII • EQSL • Engineering / Loss Control • Geographic spread • Reinsurance dependency • Model Usage • Individual risk • Portfolio level

  10. Commercial LinesNational Schedule / HPR • Strategy Considerations • Return requirements versus market price • Coverage breadth • BII • EQSL • per location versus per occurrence • Engineering / Loss Control • Account geography • Reinsurance dependency • Model Usage • Location / Account level • Portfolio level

  11. Specialty Commercial • Strategy Considerations • Return requirements versus market price • Target niche • Coverage breadth • Distribution • Geographic spread • Reinsurance dependency • Model Usage • Individual risk • Portfolio level

  12. Reinsurance / Retrocession • Strategy Considerations • Return requirements versus market price • Product offerings • Pro rata • Per risk • Catastrophe coverage • Retrocession • Data requirements • Zonal aggregate tracking / Geographic spread • Account rounding • Net line versus retro capacity • Model Usage • Program level • Portfolio level

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