Reserving for outwards reinsurance. [XL reinsurance reserving]

Document description

Of all the areas of non-life insurance, probably the one that is worst understood by practitioners (including actuaries) is reinsurance. Despite the progress made by actuaries in the last 20 years, no paper has been written that explains how we should approach the tricky topic of reserving for outwards reinsurance. Nor does one really explain the various complexities and attributes of reinsurance. This paper briefly explains the practical aspects of reinsurance and then goes on to suggest methods of tackling the estimation of the ultimate claims position. Normally, there is not one correct or even most accurate method that should be used, in view of the many factors that may have an impact on the reinsurance recoverables.