Reinsurance Solutions for Azerbaijan Nonlife products Yevgen Kuznyetsov
Reinsurance Solutions for Azerbaijan Non-life products Yevgen Kuznyetsov Treaty Underwriting CEE, Hannover Rück SE Azerbaijan International Insurance Forum 2014 Baku, 19 th June 2014
Content Hannover Re in Azerbaijan Proportional vs. non-proportional CAT XL Treaty Multi-line combined per Risk / per Event XL Treaty Reinsurance Solutions for Azerbaijan
Hannover Re in Azerbaijan Hannover Re • Well-diversified portfolio by lines of business and regions • Activities in more than 100 countries • Every country with reinsurance demand is important Hannover Re since 2002 on the Azeri market • • 3 Life and non-life Facultative and Treaty QS, Surplus, Risk XL‘s and CAT XL‘s treaties Property, Engineering (Construction), Marine (Hull and Cargo), Liability (General, Product, Employer‘s), Aviation Reinsurance Solutions for Azerbaijan
Why would I need reinsurance in Azerbaijan? v Economy is growing v Insurance is rapidly developing v Territory is exposed to natural perils v One heavy Earthquake can: • easily generate a loss ratio 3, 000% • ruin an insurance company while completely devastating its shareholder‘s capital Ø 4 Reinsurance will help you to secure the development of your business Reinsurance Solutions for Azerbaijan
Which type of reinsurance? Proportional • Premiums and losses are reduced by the same percentage • Solvency relief • Cat components can be included • Cover for several lines of business is possible. Non-proportional: • Low administrative costs: no bordereaux or quarterly accounts, less accounting • One MDP fixed in advance • Cover for several lines is possible (Property, Engineering, Liability) • Combination of per Risk and per Event (single losses and accumulation of losses) in one Treaty 5 Reinsurance Solutions for Azerbaijan
CAT XL Treaty Azerbaijan exposed to EQ, flood, landslide, hailstorm • • The coverage is compulsory by the law Insurers face losses accumulation issue Broad scope of damages to life & health, properties, vehicles Net retained losses can ruin an insurance company CAT XL • Protection from the series of losses resulting from one nat cat event • Two risks warranty with event definition (hours clause) Example: AZN 9 m xs AZN 1 m per Event Gross accumulated loss: AZN 5 m Net loss after application of underlying reinsurance (QS / Surplus / Risk XL): AZN 3 m Net loss after CAT XL: AZN 1 m (AZN 2 m of losses covered with CAT XL) 6 Reinsurance Solutions for Azerbaijan
Multi-line per Risk / per Event XL Treaty Combined per Risk / per Event XL Treaty • • economical solution: no need for two separate treaties per Risk + per Event combined one treaty + several lines + one MDP flexible structuring possible − e. g. 1 st layer per Risk only, 2 nd layer per Risk/per Event, 3 rd layer per Event only Example: • AZN 9 m xs AZN 1 m per Risk / per Event • Total annual capacity of AZN 18 m (with one reinstatement) for single losses and/or series of losses Insurer‘s retention never exceeds AZN 1 m 7 Reinsurance Solutions for Azerbaijan
Reinsurance solutions Structure with AAD Reinsurance cover with the Annual Aggregate Deductible • AZN 9 m xs 1 m xs AAD 1 m • Reinsurance costs are lower 8 Reinsurance Solutions for Azerbaijan
Information for Reinsurer § Risk profiles as per each line § Territorial split of the gross and net sum insureds § Information about underlying treaties and facultative reinsurances § Premium income estimations § Largest single and nat cat losses 9 Reinsurance Solutions for Azerbaijan
10 Thank you for your attention Yevgen Kuznyetsov Treaty Department Central and Eastern Europe Hannover Re yevgen. kuznyetsov@hannover-re. com
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