ADVISE™ - Reinsurance Optimization

Comprehensive Modeling and Detailed Analytics

In fact, it is difficult to construct a detailed analysis without the full joint distribution of results for the portfolio of businesses and the analytics. All of these modeling capabilities are built into the ADVISE – Reinsurance Optimization software. Using this powerful tool, sophisticated reinsurance analysis can become a standard business practice throughout your company and more importantly, can reduce your reinsurance costs.

Streamline Decision-Making

ADVISE – Reinsurance Optimization enables you to more intelligently manage your company’s portfolio of insurance liabilities. You can conduct sophisticated reinsurance analysis using the full joint distribution of results for your portfolio of businesses. This breakthrough application streamlines the entire decision-making process into three simple steps:

• Specify loss models and treaty terms.
• Run a simulation.
• Examine the results using analytics.

Model Treaty Terms in Detail

Because ADVISE – Reinsurance Optimization models all treaty terms in detail, the effects of changing treaty terms can be measured precisely and priced fairly. For example, you can specify any combination of quota share, per risk or per event excess treaties, with any inuring priority structure. You can also model aggregate features, re-instatement premiums, and retrospective profit sharing mechanisms such as swing rating. These treaties are applied to results from loss models that can be as detailed as necessary.

Improve Market Communications

ADVISE – Reinsurance Optimization can also improve your ability to communicate with the market. For example, if you significantly change your company’s reinsurance program, then you have to explain your decision to the market and ratings agencies. With ADVISE – Reinsurance Optimization, you can use the same analytics you relied on to make the decision to deliver reports at whatever level of detail is appropriate.

Answer Critical Business Questions

Treaties Currently in Place

• What are the set of treaties currently in place?
• What are the terms of each of the treaties in place?
• What is the company projected to spend on those treaties?
• Which of the existing treaties represent good value?
• Where is coverage needed?
• Do the treaties cover risks which the company cannot afford to shoulder?

Fair Price of Treaties

• What is the fair price of the treaties?
• What are the cash flows associated with each treaty?
• What is the fair price of each treaty given only the projected ceded losses?
• How is the fair price altered by including the benefit to surplus?
• How is the fair price altered by factoring in the reduction in risk?

Improving Existing Treaties

• Which of the existing treaties could be improved?
• What are the products covered?
• Which products are covered by quota share treaties?
• Is the company quota-sharing profitable businesses or unprofitable businesses?
• Should the set of products covered be altered?
• Could the deductibles and limits which apply be usefully altered?
• Could the aggregate deductibles and aggregate limits which apply be usefully altered?
• Is there sufficient volatility in the ceded losses to warrant a low aggregate deductible?
• How does the benefit of the treaty change when looked at over longer horizons?
• How large is the company’s Cat exposure?
• Do we have the capital to handle that exposure?
• Are appropriate deductibles and limits in place?
• Are sufficient reinstatements in place? Are they fairly priced?

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