Re:Daykin, Ch.6

Steve Langlois ( (no email) )
Mon, 29 Mar 99 08:33:07 -0500

The way I see it is that your reinsurance attachment is based on several related
factors - company philosophy, variability in losses and safety loading. If you
can price such that you are collecting the appropriate safety loading, then you
would be willing to endure the bumpy results inherent in a highly variable book
and your retention could be high. So...high collectible safety loading implies
high retention in this sense.

Steve

____________________Reply Separator____________________
Subject: Daykin, Ch.6
Author: <collision@email.com>
Date: 3/27/99 4:41 PM

In Daykin, Chapter 6, p. 199

He states that 'the better the expected profitability of a line, the higher the
suggested retention should be . . .'

To me, this makes sense, as saying, retain as much of the good/ profitable
business as you can.

Then he goes on to say that the retention limits should be chosen in proportion
to the corresponding safety loadings.

This seems contrary to my prior thought, where he seems to be saying that a high
safety loading (b/c of a potentially unprofitable/ unpredictable line) should
get a higher retention???

ANY THOUGHTS/ CLARIFICATIONS?

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