Ceded reinsurance solutions

PwC provides support in key operational areas to insurers that are undergoing changes in structure, seeking to improve performance, looking to reduce costs, developing new areas of business, integrating and updating information and data systems, or focusing on mitigating risks within the business.

Potential issues

  • You are not optimizing your use of ceded reinsurance and/or other risk financing products in reducing volatility in your underwriting results or protecting your balance sheet.
  • Bad and doubtful reinsurance debt provisions have been increasing rapidly.
  • Your reinsurance program has not responded as intended in light of recent natural catastrophe and man-made loss events.
  • You want to know if your reinsurance contracts satisfy tax-related transfer pricing regulations.

How we can help

  • Potentially lower reinsurance costs, combined with a more appropriate program for your risk profile and aggregations.
  • More effective counterparty risk management and mitigation techniques, including hedging.
  • Identification of weaknesses in contract language around event or loss trigger definitions.
  • Improved internal processes to ensure that primary policy wordings, terms, and conditions are consistent with those for ceded reinsurance treaties.
  • Avoidance of tax penalties and optimization of your tax position for internal reinsurance arrangements.

Our services

  • Reinsurance strategy and program design reviews to check the effectiveness of the reinsurance program and other risk financing structures based on your company's risk profile.
  • Reinsurance modeling to quantify the volatility of the net underwriting result and the efficiency of the current program in dealing with this volatility; this includes suggested alternative programs, depending on risk-reward appetite.
  • Advising on loss event triggers and definitions in areas such contingent business interruption, aggregations of events, and legal rulings.
  • Reviews of internal processes and controls around changes to, and ensuring consistency between, contract wording, terms and conditions for both inwards primary and reinsurance writings, and outwards reinsurance arrangements.
  • Actuarial transfer pricing reviews, including the assessment of whether premium quotations meet arm's length criteria, the estimation of potential tax adjustments, and the provision of required tax documentation.
  • The benchmarking of ceded reinsurance policies and controls against competitor capabilities.