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Ceding Company Considerations

Learn about the ceding company considerations, advantages of brokers, structuring reinsurance, selecting trading partners, and managing reinsurance programs effectively with AEGIS Insurance Services. Understand key factors like availability, quality, and accessibility.

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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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