SOA 2010 Annual Meeting & Exhibit Oct. 17-20, 2010

SOA 2010 Annual Meeting & Exhibit
Oct. 17-20, 2010
Session 68 PD, How to Lose a Million Bucks
Without Really Trying: Oversights in Negotiating
Life Reinsurance Treaties
Moderator:
Clark F. Himmelberger, FSA, MAAA
Presenters:
C. Spencer Aldridge
Clark F. Himmelberger, FSA, MAAA
Mark Sarlitto
How to Lose a Million Bucks Without Really Trying…
Oversights in Negotiating Life Reinsurance Treaties
C. S
C
Spencer Al
Alridge,
id
II
Vice President & Deputy General
Counsel, Transamerica Reinsurance
Clark Himmelberger
Consulting Actuary, Milliman, Inc.
Mark Sarlitto
Senior Vice President & General
Counsel, Wilton Reassurance
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Useful Resources for Managing
the Reinsurance Function
1. ACLI Life Reinsurance
Treaty Sourcebook
3. SOA Reinsurance Treaty
Discussion Document
2. Tiller’s Reinsurance Textbook
4. NAIC Reinsurance Regulations
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November 9, 2010
1. ACLI Life Reinsurance Treaty Sourcebook
 Reference tool for creating life insurance treaties
– Cooperatively developed by reinsurers and insurers
– Checklist of what to include in a treaty
– EXAMPLE: DIVIDENDS (Coinsurance Agreements)
• Option 1: Reinsurer will not reimburse dividends
• Option 2: Reinsurer will reimburse proportionate share
 Where you can find it
– Order from www.ACLI.com (for $1,500)
$
– Tiller’s Life, Health & Annuity Reinsurance textbook appendix
• Available at ACTEX, Amazon.com (for about $150)
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2. Life, Health & Annuity Reinsurance 3rd Edition
 Documents fundamental principles of reinsurance
 Excellent reference for terminology, history
 Where you can find it
– Available at ACTEX, Amazon.com
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3. SOA Life Reinsurance Treaty Discussion
 Less of a checklist, more of a discussion of why a particular
treaty clause is important and what it should accomplish
 EXAMPLE: Accelerated Benefits
– 4 paragraphs in ACLI sourcebook; 5 pages in SOA
> One whole page describing potential problems you may
encounter with reinsuring accelerated benefits
 Where you can find it
– SOA website in the reinsurance section
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4. NAIC Reinsurance Regulations
 Model Act on Credit for Reinsurance
– Reinsurer requirements for allowing reserve credits
 Credit for Reinsurance Model Regulation
– Detailed guidance on implementing the Model Act
 Life & Health Reinsurance Agreements Model Reg
– Treaty requirements for allowing reserve credits
 SSAP #61 – based off of FASB #113
– Rules on the level of risk transfer required for reinsurance
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November 9, 2010