Transcript Slide 1

Reinsurance results from exercises
By Roar Rasten Gard AS
The Nordic Association of Marine Insurers
1
Exercise 1 QS
•
Program: 50% quota share with treaty capacity 50 million
•
Brokerage Nil
•
Overrider commission 10%
•
Portfolio:
1. Exposure 50 million, premium 300.000
What will be the net* ceded premium to reinsurers?
The risk has a claim of 1 million , what is the claim recovery
from reinsurers?
* Premium net of commissions
Exercise 1 QS Result
A 50% Quota share
With a treaty capasity 50 million
Overrider 10%
Premium
Gross
300,000
50& Ceded
Overrider
Net ceded
150,000
- 15,000
135,000
Gross
Ceded claim
Claim
1,000,000
500,000
Exercise 2 QS
•
Program: 80% quota share with treaty capacity 50 million
•
Brokerage Nil
•
Overrider commission 10%
•
Portfolio of 5 risks:
1. Exposure 75 million, premium 750.000
2. Exposure 50 million, premium 300.000
3. Exposure 30 million, premium 200.000
4. Exposure 2 million, premium 20.000
5. Exposure 50.000, Premium
1.000
Do we need to use Fac to reduce the exposure to the treaty?
What will be the net ceded premium to reinsurers?
Risk 2 has a claim of 1 million and risk 4 has a claim of 50.000.
What is the total claims recovery from reinsurers?
Exercise 2 QS result
80 % Quota Share with capasity 50 mill
Brokerage nil, overrider commission
10 %
Ceded premium
Gross
Treaty
Share ceded Share
Premium
Reinsurers
Less
Net ceded
Risk
Exposure
premium limit
to Fac
to treaty
to QS
share of prem. overrider premium
1
75,000,000
750,000 50,000,000
33 %
67 %
500,000
400,000 - 40,000
360,000
2
50,000,000
300,000 50,000,000
100 %
300,000
240,000 - 24,000
216,000
3
30,000,000
200,000 50,000,000
100 %
200,000
160,000 - 16,000
144,000
4
2,000,000
20,000 50,000,000
100 %
20,000
16,000 - 1,600
14,400
5
50,000
1,000 50,000,000
100 %
1,000
800 80
720
Sum
1,271,000
1,021,000
816,800 - 81,680
735,120
Recovery from reinsurers
Risk
Sum
Gross
Treaty
Share
Claims
Reinsurers
Exposure
Claims
limit
to treaty
to QS
80% share
1
75,000,000
50,000,000
67 %
2
50,000,000 1,000,000 50,000,000
100 % 1,000,000
800,000
3
30,000,000
50,000,000
100 %
4
2,000,000
50,000 50,000,000
100 %
50,000
40,000
5
50,000
50,000,000
100 %
1,050,000
1,050,000
840,000
The Nordic Association of Marine Insurers
5
Exercise 3 XL-program
•
2 layered program:
◦
◦
1st layer 10 xs 10 with 2 reinstatement at 100. Rate on line (RoL)
is 25.
2nd layer 30 xs 20 with 2 reinstatements at 100. RoL is 15.
The program is adjustable at an EPI of 60. Minimum and
deposit premium is equal to estimated premium.
•
What is estimated premium for layer 1 and 2?
Exercise 3 XL-program
Premium cost per layer
Layer
limit
1
10
2
30
Sum
RoL
25%
15%
M&D Prem.
2.5
4.5
7.0
The Nordic Association of Marine Insurers
7
Exercise 3 cont. XL-program
•
2 layered program:
◦
◦
1st layer 10 xs 10 with 2 reinstatement at 100. Rate on line (RoL)
is 25.
2nd layer 30 xs 20 with 2 reinstatements at 100. RoL is 15.
The program is adjustable at an EPI of 60. Minimum and
deposit premium is equal to estimated premium.
•
What is estimated premium for layer 1 and 2?
•
There are 3 large claims in the year: one is 30, the 2nd
one is 12 and the third is 15. Calculate the claim recovery
from each layer.
What will be the reinstatement costs?
•
Exercise 3 XL-program
Premium cost per layer
Layer
limit
1
2
Sum
Premium cost per layer
Layer
limit
1
2
Sum
RoL
10
30
25
15
RoL
10
30
M&D Prem.
2.5
4.5
7.0
M&D Prem.
25
2.5
15
4.5
7.0
Adjustment Adjusted
rate
premium
10 %
0.3
10 %
0.5
0.7
Exercise 4
Claims recovery per layer
Claim 1
Claim 2
Claim 3
Sum
Retention
10.0
10.0
10.0
30.0
Layer 1
10 xs 10
10.0
2.0
5.0
17.0
Layer 2
30 xs 20
10.0
The Nordic Association of Marine Insurers
10.0
Total
30.0
12.0
15.0
57.0
9
Exercise 5 XL-program
•
2 layered program:
◦
◦
1st layer 10 xs 10 with 2 reinstatement at 100. Rate on line (RoL)
is 25.
2nd layer 30 xs 20 with 2 reinstatements at 100. RoL is 15.
The program is adjustable at an EPI of 60. Minimum and
deposit premium is equal to estimated premium.
•
What is estimated premium for layer 1 and 2?
•
There are 3 large claims in the year: one is 30, the 2nd one is
12 and the third is 15. Calculate the claim recovery from each
layer.
What will be the reinstatement costs?
•
•
The total premium income for the portfolio under the
program has reached 66. Recalculate the premium for the
program and the reinstatement premium.
Exercise 5 XL-program
Premium cost per layer
Layer
limit
1
2
Sum
RoL
10
30
Retention
10.0
10.0
10.0
30.0
Claim 1
Claim 2
Claim 3
Sum
25
15
Layer 1
10 xs 10
10.0
2.0
5.0
17.0
Reinstatement premium per layer
ReinstateLayer
ment
Claim 1
Retention
Layer 1
2 at 100%
2.50
Layer 2
2 at 100%
1.50
Total
4.00
Adjustment premium
Actual
EPI
premium
60
66
Layer
1
2
Sum
M&D Prem.
2.5
4.5
7.0
Layer 2
30 xs 20
10.0
10.0
Total
30.0
12.0
15.0
57.0
Reinstatement payable
Claim 2
Claim 3
0.50
0.50
1.25
1.25
Total
Net recovery
4.25
12.75
1.50
8.50
5.75
21.25
Adj. rate
10 %
M&D Prem. Reinst. Prem. Pre adj. Prem
2.5
4.3
6.8
4.5
1.5
6.0
7.0
5.8
12.8
The Nordic Association of Marine Insurers
Adj. Rate
Adj. Prem
10 %
0.7
10 %
0.6
1.3
Tot. Prem
7.4
6.6
14.0
11