Reaching new heights Ceding Company Perspective

Contents Motivation for buying Structures Relationships matter Increased Expectations of Brokers Educating Internal Constituents Tradeoffs Data

Reduce Risk of Ruin Stabilization of LR Meet regulatory Requirements Rating Agency Concerns Large line capacity UW help –Product/price –Audits –Feedback on certain classes of business or new states –Training Claims help on large losses Financing (Surplus relief) Motivation For Buying

Possible Reinsurance Structure Property Catastrophe Working Layer Umbrella Fac Quota Share Aggregate Stop-Loss

Relationships Matter Better advice and service from intermediaries if they know you well. Pay more for “carve out” if “value-added” services are worth it. Property Cat, Working Layer Negotiations –Pricing differentials - important –Capacity (next hard market) - priceless!

Carving out… Better to include umbrella in casualty/clash treaty, or carve out? Save $ this year? Risk “mucking up” experience rating on your casualty treaty? Value-added services? Balance relationships? How soft is the market currently?

Carve out Umbrella? What if your umbrella reinsurer provided… Great sounding board for UW’s on day-to-day account discussions Help with UW audits Training sessions for new underwriters “Advanced Topic” training Speakers for UW Conference Research for new state expansion Would you still want to put your umbrella in your casualty treaty?

Relationships Matter Words are easy, like the wind; Faithful friends are hard to find. - William Shakespeare

What we look for in a broker “Any chimp can place reinsurance”

Increased Broker Expectations Cat, Terrorism, WC modeling Rating agency advisory ERM Contract wording Claims Market Security analysis Competitive intelligence / Research Expansion ideas

Need to Educate How involved is Sr. Management and/or the Board? Risk of ceding too much –Cede too much profit to avoid volatility –In reinsurers’ (and brokers’) best interest to share worst case scenarios since reinsurance is a “fear-based buy” Risk of not ceding enough

Tradeoffs “Don’t cede too much of our profit, but smooth out the volatility.” “We want higher rated markets on our program…but don’t want to pay more.”

Data "Everything should be made as simple as possible, but not simpler." -- Albert Einstein What companies hope reinsurance u/w’s remember: Ask good questions to assess our true risks, but... Differentiate between different types of companies. Give my companies’ experience enough weight. Understand the law of diminishing returns. Use common sense.

Reaching new heights Thank you - End Slide