Reinsurance is an important part of the risk management framework for an insurer
►Finite reinsurance is a form of reinsurance which considers the time value of money and has loss containment provisions
►One of its objectives is the enhancement of the cedant’s financial statements or operating ratios, e.g., the combined ratio; loss portfolio transfers, financial quota shares are examples
►It is frequently referred to as “structured reinsurance”
►Key characteristics of structured risk:
“In exchange for putting a limit on our liability, we offer our clients the possibility of sharing in the profitability of a contract” Centre Re, 1989 Annual Report