Pricing reinsurance contracts

The key objectives of an insurer in arranging reinsurance are inter alia; increasing capacity to handle larger risks by passing to the re insurer that part of the exposure which would not normally bear, because of financial constraints; enhancing ability to accept larger lines than capital allows; stabilizing operating results from year to year with the re insurer absorbing larger claims or catastrophe losses; increasing the chances making a profit by reinforcing the underwriter’s attempts to establish an account which is homogeneous in both size and quality of risk; ability to write and new risk exposures. The functions of reinsurance can be considered as providing services to protect increased capacity, financial ...

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