INDONESIA National BIG Reinsurance Company

INDONESIA National BIG
Reinsurance Company
The Outline
• Capital Accumulation
• Indonesia Ceding Market
– Equity and Net Retention Distribution
– Treaty Limit (Property Proportional)
– Domestic Retention and Balance of Payment
• Indonesia Professional Reinsurer
• New Regulations for a more sophisticated
insurance industry
• The Role of the Anticipated BIG National
Reinsurance Company
Indonesia Ceding Market
• 90% companies comply with PER
11/BL/2012 regarding to Ultimate Net
Retention
– 0.5% - 1% of Equity
• Proportional Property Capacity :
–
–
–
–
Total > USD. 250 mio
50% < USD. 10 mio
73% < USD. 20 mio and
22% > USD. 20 mio (Dominantly JV)
Indonesia Ceding Market
• Domestic Retention 2012 (Property)
– National Companies : 53%
– Joint Ventures : 30%
– Indonesian Professional Reinsurers : 83%
• Balance of Payment (2012)
– Premium Ceded Overseas (all classes) :
• USD. 1.8 bio with average Growth > 15% per year
– Deficit of Balance of Payment : > USD. 600 mio
– Deficit Projection : easily reach > USD. 1 bio by 2016
(5% growth)
Indonesian Professional Reinsurer
• Member : NasRe, TuguRe, Marein & ReINDO
• Total Equity ≈ USD. 150 mio
• Total Any of Acceptance Capacity
(Property) ≈ USD. 70 mio (PML 80%)
• Deductible (UR) :
– USD. 500.000 – USD. 2.000.000
Set of Regulation
• Prudential
– Technical Reserve : URR dan UPR (more Actuarial)
– CAT Cover : 250 Return Period (modeled portfolio)
• Market Confident
– Tariff for Property and Motor
• More Retention
– Higher Net Retention per risk and Aggregate Retention per
Year
– Priority Treaty (now including All Layers for Non
Proportional Treaties)
– MAIPARK EQ Cession
• Total Ceding Capacity > USD. 200 mio a.o.r
– Say effective capacity USD. 100 mio a.o.r
• Total IPR Capacity ≈ USD. 70 mio a.o.r but
much lower Non Proportional Capacity
• L/R (direct property) < 55%
• L/R (reinsurance all classes) < 50%
• Tariff and regulated commission
Why Our Domestic Retention Low ?
• Treaty Capacity and up to 70% of
reinsurance is by Facultative
• In Facultative cessions, ceding retain much
lower compared to PER
• Global Accounts (Fronting)
• Small Priority Treaty (Head office/Regional
share in Treaty = Priority ?)
• Lack of expertise ?
BIG National Reinsurance Company
• To support domestic retention commercially
– Providing Fact. and Non Proportional
Capacity (more and more NP placement in the
market)
• Providing the same level of services
compared to global reinsurer
– It would take some times but need to start
NOW
• Preparing the industry for a more
liberalized regulations (MEA for example)
BIG National Reinsurance Company
• This could be the fastest way to boost
domestic retention
• In sequence, by having strong national
partner, the company will encourage
ceding company to retain more