Reinsurance Commutations and Collectibility

Actuaries are required in their Loss Reserve Opinions to comment on the collectibility of reinsurance. The panelists will discuss techniques some companies use to address this requirement, as well as, the more general topic of evaluating the security of a reinsurer. Specific areas to be covered include offshore and international reinsurers, the role of Letters of Credit, sources of information on troubled companies, and remediation of collectibility problems. One common solution to collectibility problems is commutation. The panelists will describe and discuss the motivation, pricing, negotiating, and accounting of Reinsurance Commutations from both the ceding company and reinsurer perspectives. Also, the special consideration of insolvent companies will be presented.