Properties of a Combined Unconventional Reinsurance (CRC) Set Up by Convential Non-Proportional Reinsurance-Retrocession Covers

In the first part of the paper we shall describe a profit center (PC) system, the reasons why it is set up, its advantages and disadvantages, as well as the main issues that the general management of a large insurance company that has introduced the profit center system has to take care of on an ongoing basis. The properties of a CRC will be described in the first part of the paper by setting up an internal fund for the PCs (the first CRC type), and, by setting up an external fund by XL reinsurance premiums for the PCs (the second CRC type). The CRC types will be compared in both cases the reinsurance company should be covered by the ceding company by a multi-line stop loss retrocession cover. In the second part of the paper the second CRC type will be mainly considered and the corresponding reinsurance system for fulfilling the ceding company’s plans and intentions of controlling and monitoring its profit center system will be examined. The CRC’s conventional and unconventional properties and the reasons it has been set up will be given and a comparison made to the better known and more frequently used unconventional Strategic Reinsurance Program (SRP). An SRP and its properties has been described by the author of this paper in the proceedings of the last Astin Colloquium held in Tokyo in the paper “The Strategic Reinsurance Program (SRP)”.