Reinsurance

MBA Actuaries offers expertise in reinsurance design, evaluation, management, and dispute resolution. We provide expert services that can help you successfully navigate reinsurance challenges whether you are a cedant, a reinsurer, a retrocessionaire, an intermediary, a pool manager, a litigating attorney, an arbitrator, an insurance regulator, or otherwise engaged in reinsurance. Our clients benefit from our consultants’ decades of broad reinsurance experience. In regard to dispute resolution, MBA Actuaries appears on the arbitrator list of the Reinsurance Association of America, and is active in ARIAS-US.

Reinsurance can be designed to accomplish many purposes including financial protection, catastrophe coverage, capacity for growth, and more. Reinsurance contracts, even those with commutation clauses, can apply to exposures that require decades to resolve. Today, reinsurance issues include both (a) controversy and uncertainty arising from reinsurance underwritten long ago, and (b) the design and monitoring of new reinsurance programs which may not be settled for decades to come.

Examples of reinsurance issues, for which MBA Actuaries can help you, include:

• Arbitration and Dispute Resolution – Reinsurance disputes are often settled through arbitration. MBA Actuaries is one of the few consulting firms to employ consultants on the RAA list of arbitrators. Even if not employed as an arbitrator, we bring the expertise necessary to analyze the positions of parties in a dispute and facilitate resolution.

• Asbestos and Mass Torts – In today’s litigious society new demands are being placed on old reinsurance even as new coverages are being negotiated. Sound actuarial analysis with a historical perspective is a necessary input to success in addressing both issues.

• Captives and Alternative Risk Transfer – A well designed reinsurance program can be the key ingredient in establishing a successful captive insurance company or association plan. Unfortunately, changes in the reinsurance market can materially and unexpectedly affect the most carefully designed reinsurance program. Experienced actuarial evaluation is critical to the incorporation of reinsurance into strategic planning as well as developing timely responses to fluctuations in reinsurance markets.

• Commutations – Some reinsurance contracts settle by commutation. Typically commutation calculations rely on sound actuarial estimates of unpaid loss and loss adjustment expense, possibly net of other recoveries and on a discounted basis. Independent actuaries often are asked to present such estimates so that the parties involved can understand them and come to agreement.

• Program Design – Parties enter into reinsurance agreements with specific purposes in mind. Due to the complex interactions between risk, exposures, coverages and payment patterns, independent actuarial analysis is often needed to confirm that a reinsurance program will accomplish its intended purposes.

• Financial Reporting – Appropriate accounting for reinsurance on a statutory, GAAP and tax basis on an ongoing basis or during M&A negotiations can make the difference between a profit and a loss. MBA Actuaries can help you get it right.

• Insolvencies and Damage Estimates – How much should you increase reserves if one of your reinsurers becomes insolvent or is placed in rehabilitation by a regulator? How should you budget for changes in your expected cash flow because of delayed or no-longer available reinsurance recoveries? MBA Actuaries can help you manage these contingencies.

• Mergers & Acquisitions – Reinsurance can be a key valuation consideration for mergers and acquisitions. The parties involved need to be comfortable that their interests are properly represented in the design of reinsurance for the transaction as well as the valuation of existing reinsurance. Depending on deal structure, independent actuarial valuation may be needed to determine price adjustments at some future point after the deal is consummated.

• Program Business – Reinsurance is crucial to successful program business. Expert actuarial analysis can be crucial to the design and monitoring of such reinsurance to ensure that program business achieves its business goals.

• Runoff – When a reinsurer or any insurer closes its doors, its claims live on. Managing runoff, anticipating payout patterns, budgeting for claims settlements, setting appropriate assessment rates in cases involving guaranty funds and other considerations require professional actuarial support and sound actuarial estimation.

• Other – Potential reinsurance issues are limited only by the mind of man. MBA Actuaries is ready to help you make sense of your reinsurance issues and help you achieve success.