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  #1  
Old 09-23-2018, 05:24 PM
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Colonel Smoothie Colonel Smoothie is offline
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Default Who makes reinsurance purchasing decisions?

I had a brief stint in reserving, but it was never my job to assess reinsurance decisions - for example, I was never asked to test whether one potential treaty would be better than another or be in a position to recommend that we cover certain large exposures by buying reinsurance

These types of decisions never seemed to be in the duties of any of the actuaries I've worked with, although the places I worked at did buy a lot of reinsurance. As far as day-to-day duties went, the reinsurance was automatically applied by the ERP so it would spit out your gross, net, and assumed triangles, and you'd complete your reserve analysis accordingly.

Buying reinsurance certainly seems like something actuaries can help out with, but my impression is that work is done by high-ranking people or just actuaries at different companies than the ones I've worked at. But I suppose if actuaries were heavily involved in those decisions I would have seen the work trickle down to me in some form or fashion.

If actuaries do work in this area, in what departments do they work in, and what companies do they work at? What are their titles?
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  #2  
Old 09-23-2018, 06:09 PM
TDH TDH is offline
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Quote:
Originally Posted by Colonel Smoothie View Post
I had a brief stint in reserving, but it was never my job to assess reinsurance decisions - for example, I was never asked to test whether one potential treaty would be better than another or be in a position to recommend that we cover certain large exposures by buying reinsurance

These types of decisions never seemed to be in the duties of any of the actuaries I've worked with, although the places I worked at did buy a lot of reinsurance. As far as day-to-day duties went, the reinsurance was automatically applied by the ERP so it would spit out your gross, net, and assumed triangles, and you'd complete your reserve analysis accordingly.

Buying reinsurance certainly seems like something actuaries can help out with, but my impression is that work is done by high-ranking people or just actuaries at different companies than the ones I've worked at. But I suppose if actuaries were heavily involved in those decisions I would have seen the work trickle down to me in some form or fashion.

If actuaries do work in this area, in what departments do they work in, and what companies do they work at? What are their titles?
In my experience (commercial/speciality lines), reinsurance strategy will usually be set by management or the head underwriter. Which makes sense as the RI structure will depend on what type of business they are planning to write, and their specific growth plans.

If it's a new structure then it'll be passed on to the actuaries to determine the profitability (usually capital modelling guys as their models have an assumed reinsurance structure and it is easy to adjust it). They may then tweak the structure depending on the results. If the structure isn't changing then actuaries are not really needed.

The RI brokers are also used heavily - it's their job to find you (the client) the most appropriate structure.
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Old 09-23-2018, 07:17 PM
Westley Westley is offline
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Often see (or have been) actuaries consulted on the possible outcomes, but not really the actuaries' decision to make IME.

Partially depends on why you're buying reinsurance. If you're trying to get surplus relief, then whomever is doing capital modeling (CFO or somebody who reports to the CFO) is probably in charge (and is consulting with the actuaries, unless s/he's an idiot).

If you're doing something XOL or cat, it's more of a CEO decision (because if there's a cat the CEO will have to explain to investors why they had coverage at the level they did, or didn't). If you have individual lines or risks that you're trying to lay off the specific risks, then the underwriters or head of the LOB might decide - and may not bother to consult with the actuaries if they've just decided to lay off the majority of the risk; for example I know a company that was going into some Excess and Surplus lines and pretty much didn't want any of the risk - they were just accommodating some agents, and their intent (can't recall level of success) was to reinsure 90% or more.
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Old 09-23-2018, 08:35 PM
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From what I’ve seen on the life side, reinsurance would fall under a product management team, which is close to, but distinct from, product development (pricing).
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Old 09-23-2018, 09:40 PM
Fracktuary Fracktuary is offline
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When i worked in life pricing, we would often use MG ALFA to determine which reinsurers were giving us the best quote in terms of IRR.

The decision about the type of reinsurance as well as the level of retained risk was generally made by the executive team.
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Old 09-23-2018, 10:49 PM
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Ive taken kind of a glimpse at ceded reinsurance side before. From what ive seen one or two people from the actuarial (chief actuary and maybe someone else) were "involved" with reinsurance decision along with top folks from other depts. The decision was made by cfo.
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Old 09-24-2018, 03:24 AM
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Oh yeah I should have been more specific in that, I meant internal actuaries. When I was working, I did see actuaries, but they were from the broker side. Right before I left my first company ,they did have some guys training us on how to use cat models, so maybe there's a bigger internal function built up by now.
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Old 09-24-2018, 04:14 AM
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PeppermintPatty PeppermintPatty is offline
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Quote:
Originally Posted by Westley View Post
Often see (or have been) actuaries consulted on the possible outcomes, but not really the actuaries' decision to make IME.

Partially depends on why you're buying reinsurance. If you're trying to get surplus relief, then whomever is doing capital modeling (CFO or somebody who reports to the CFO) is probably in charge (and is consulting with the actuaries, unless s/he's an idiot).

If you're doing something XOL or cat, it's more of a CEO decision (because if there's a cat the CEO will have to explain to investors why they had coverage at the level they did, or didn't). If you have individual lines or risks that you're trying to lay off the specific risks, then the underwriters or head of the LOB might decide - and may not bother to consult with the actuaries if they've just decided to lay off the majority of the risk; for example I know a company that was going into some Excess and Surplus lines and pretty much didn't want any of the risk - they were just accommodating some agents, and their intent (can't recall level of success) was to reinsure 90% or more.
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Originally Posted by hjacjswo View Post
Ive taken kind of a glimpse at ceded reinsurance side before. From what ive seen one or two people from the actuarial (chief actuary and maybe someone else) were "involved" with reinsurance decision along with top folks from other depts. The decision was made by cfo.
These. Except for facultative reinsurance, which is typically purchased by the underwriter, reinsurance is usually purchased by someone high up in finance or risk management. But they ordinarily have some in-house actuaries evaluating possible deals.

I've seen in-house actuaries work on analyzing treaties for the decision-maker at multiple companies, and I'm really surprised CS hasn't.
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  #9  
Old 09-24-2018, 04:17 AM
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The broker usually provides an actuarial analysis, too. Maybe some companies rely on that?
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Old 09-24-2018, 08:07 AM
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Marcie Marcie is offline
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Quote:
Originally Posted by Colonel Smoothie View Post
I had a brief stint in reserving, but it was never my job to assess reinsurance decisions - for example, I was never asked to test whether one potential treaty would be better than another or be in a position to recommend that we cover certain large exposures by buying reinsurance

These types of decisions never seemed to be in the duties of any of the actuaries I've worked with, although the places I worked at did buy a lot of reinsurance. As far as day-to-day duties went, the reinsurance was automatically applied by the ERP so it would spit out your gross, net, and assumed triangles, and you'd complete your reserve analysis accordingly.

Buying reinsurance certainly seems like something actuaries can help out with, but my impression is that work is done by high-ranking people or just actuaries at different companies than the ones I've worked at. But I suppose if actuaries were heavily involved in those decisions I would have seen the work trickle down to me in some form or fashion.

If actuaries do work in this area, in what departments do they work in, and what companies do they work at? What are their titles?
In your "brief stint" in reserving, what was your role? Is there a reason that a reserving analyst with little tenure would be involved in reinsurance decisions?

And it seems like their decisions did trickle down to you in the form of gross and net triangles, Colonel?
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