Actuarial Involvement in the Liquidation of Insolvent Reinsurers

The liquidation of an insolvent reinsurer is traditionally a very long and frustrating process. This is the result of the need to wait for all of the claims (insurance and otherwise) in the liquidation to crystallize before the residual assets of the insolvent reinsurer may be distributed. The most significant cause of delay is the time required for the reinsured claims to be settled and paid by the ceding companies. In order to expedite the process, the liquidator may (in some jurisdictions) employ actuaries to estimate the ultimate value of reinsured claims. The liquidator may then distribute the assets of the reinsurer as though the reinsured claims were known and paid rather than estimated. This procedure can shorten the liquidation period significantly, perhaps to as little as three years. This paper will discuss the involvement of actuaries in an actual liquidation, the issues while were raised and the methods which were used. Reinsurance Research - General/NOC