Insurance Management

Reinsurance and Alternative Risk Transfer

Integrated course, 2.00 ECTS

 

Course content

This course discusses reinsurance as a key instrument to manage risk and capital in insurance companies. Specific examples of the application of reinsurance of direct insurers are given, and some attention is given to insuring natural catastrophes. This course can be seen as supplement to the risk and capital management course. Finally, insurance linked securities are presented as instruments allowing to trade insurance risk in the capital markets.

The core contents of this course include:
[1] Product classes in reinsurance; impact on the direct insurer's risk profile;
[2] Reinsurance market; counter-party risk in reinsurance;
[3] Natural catastrophes (NATCAT): overview, risk models, pricing basics;
[4] Relationship direct insurer vs. reinsurer (incl.exchange of data);
[5] Accounting of reinsurance contracts; effect on capital requirements (e.g. Solvency II);
[6] Alternative risk transfer: securitisation of insurance risk (incl. structuring costs); insurance linked securities: scope of application, market.
Optional contents can include:
[7] Typical structure of reinsurance contracts;
[8] Implications of a bankruptcy of the direct insurer or reinsurer;
[9] Mortality swaps and mortality-linked securities.

Teaching language may be English.

Learning outcomes

Graduates are familiar with the essential elements of reinsurance contracts, master the classical and alternative types of reinsurance contracts and are able to assess their impact on the risk profile of an insurance company, can apply the common quotation procedures.

Recommended or required reading and other learning resources / tools

References: Briys/de Varenne (2001): Insurance: From Underwriting to Derivatives, Wiley. Hallmann et al (2008): Steuerung von Versicherungsunternehmen, Schäffer-Poeschel. Nguyen/Romeike (2013): Versicherungswirtschaftslehre, Springer. Noack et al (2010): 100 Versicherungskennzahlen, cometis. Romeike (2003): Balanced Scorecard in Versicherungen, Gabler. Romeike et al (2008): Risikomanagement im Versicherungsunternehmen, Wiley.
Academic journals: -

Mode of delivery

2 ECTS: ILV

Prerequisites and co-requisites

none

Assessment methods and criteria

ILV: final exam, assessment of active course participation