From ReFocus 2010, held on February 28-March 3, 2010, in Lake Las Vegas, NV. This session discusses an arbitrator’s view of how to develop and maintain reinsurance relationships in order to avoid disputes.

We investigate the impact of counterparty risk (from the insurer’s viewpoint) on contract design in the reinsurance market. We study a multiplicative default risk model with partial recovery and where the probability of the reinsurer’s default depends on the loss incurred by the insurer. The reinsurer (reinsurance seller) is assumed to be risk-neutral, while the insurer (reinsurance buyer) is risk-averse and uses either expected utility or a conditional tail expectation risk criterion. We show that generally the reinsurance buyer wishes to overinsure above a deductible level, and that many of the standard comparative statics cease to hold.

Insurers can leverage information from their required Own Risk Solvency Assessment (ORSA) and use it internally to improve the likelihood of solvency and gain a competitive advantage.

This is a presentation from the 2010 ERM Symposium 4/12-4/15/2010 Concurrent Sessions Q-Quantification. This session will provide an overview of a transition matrix/recovery rate approach to evaluating reinsurance counterparty risk. Assumptions and parameter issues involving base-case and stressed scenarios will be discussed and a numerical example provided to enhance understanding of the methodology. Presenters from primary companies who have evaluated their counterparty risk using this methodology could optionally be included to provide a real-world application standpoint. Another source of potentially valuable viewpoints would be representatives from appropriate rating agencies.

With the subprime credit crisis and ensuing economic crisis, counterparty risk has become a central issue in evaluating financial transactions. For many property and casualty insurance and reinsurance organizations, reinsurance counterparty risk represents the largest source of potential bad debt exposure. Traditional methods of evaluating this risk may fall short of rating agencies' and companies' internal needs. This webcast will provide an overview of a transition matrix/recovery rate approach to evaluating reinsurance counterparty risk. Assumptions and parameter issues involving base-case and stressed scenarios will be discussed and a numerical example provided to enhance understanding of the methodology.

In today’s competitive environment, there is an increasing focus on the process of selecting life reinsurers, largely as a result of two industry trends, namely consolidation and the amount of reinsurance ceded.

From a session at a meeting of the Society of Actuaries held in San Diego, CA, June 22-23, 2000 A discussion of liquidity management for life insurance companies marketing institutional clients, in particular with respect to GIC contracts and Funding agreements. Topics included: · What happened at General American with their defaults on funding agreements. Why did the regulators and rating agencies miss the problems? · What was the impact of reinsurance? · What is the effect of adding institutional business such as putable funding agreements on liquidity management? · Are there prudent levels of this business that can be beneficial? · What is the effect of funding agreements with downgrade provisions on liquidity risks, and do such provisions create a preference for sophisticated institutional contract holders?

Presented at May 1985 Spring Meeting. This session discussed topics of current interest in the United States and Canada from the perspective of the reinsurer and the ceding company: Update of AICPA activities, including AICPA audit guide, Current GAAP standards for reinsurance ceded and assumed, NAIC activities, Life insurance tax law.