Insurance companies transfer parts of the risk, they assume from their
policyholders, to reinsurers. Underwriting reinsurance business is the process
of relocating risks from an insurer to a reinsurer. A reinsurance business
is considered to be in run-off, if the reinsurer discontinues to underwrite
it. Various active run-off management approaches address the issue of such
legacy business. The content of this paper covers the development and
implementation of a specific run-off management project at the reinsurance
company, Swiss Re, called the commutation initiative for small reserve value
business in Latin America. In general terms, commutations are an instrument
to prematurely terminate contracts. To reach a commutation agreement, the
contractual counterparts negotiate a compensative payment, derived from the
remaining contract value. By transferring this commutation payment, all
contractual obligations are ceased and the contract reaches finality.
This paper describes the prioritization of the initiative within the Swiss
Re project landscape, the definition of the project scope, the estimated
impact of macroeconomic factors and the valuation technique used for the
calculation of commutation offers. / (cont.) Based on the mentioned aspects, the paper
contains reasonable expectations on the project performance and potential.
Finally the paper contains the evaluation of the initiative, discussing the
reasonableness of the project targets and the adequacy of the project approach
for the specific situation at Swiss Re as well as the suitability of the
process structure and the performance measures. The content of this paper
also includes the assessment of the project´s impact on operations, especially
concerning run-off administration costs. A final judgement on the project
performance cannot be rendered yet, as the project is still in progress.
The indications displayed in this paper suggest, that further research and
future initiatives should focus on improving the accounting system and contract
structuring in order to reduce the occurrence of run-off contracts.
.
| Identifer | oai:union.ndltd.org:UDLA-Thesis/oai:ciria.udlap.mx:u-dl-a/tesis/5051026599951 |
| Date | 07 December 2010 |
| Creators | Cremer, Thomas Karl Josef |
| Contributors | Mtro. Rubén Octavio López Haro, Dra. Elizabeth Salamanca Pacheco, Dra. Diana Debora Bank Guzmán |
| Publisher | Universidad de las Américas Puebla |
| Source Sets | UDLA-Thesis |
| Language | in |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation, Tesis o Disertación Electrónica |
| Format | application/pdf, text/html |
| Coverage | Licenciatura |
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