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Chapter C6 Core business

Some companies focus on the selling of reinsurance as they consider this their core business. Examples
of these are the large multinational reinsurance companies. With uncertain stock market fluctuations,
these companies would prefer to concentrate on growing their core business of reinsurance rather than
experiment with developing new avenues of potential income.

D Sellers of reinsurance

The sellers of reinsurance are the companies and Lloyd’s syndicates that are in the business of
accepting reinsurance business from the sources outlined in section B. As reinsurers they may operate
as a leading underwriter, i.e. setting the price and terms and conditions, or offer supporting capacity for
the amount of reinsurance required by the buyer. If the amount of reinsurance cover required by the
buyer is within the underwriting capacity of the reinsurer, the contract may be accepted 100% by a single
reinsurer.
We shall now consider the various categories of sellers of reinsurance.

D1 Reinsurance companies

A professional reinsurance company may be a multinational organisation obtaining its business through
a network of branch offices and subsidiary companies in many different countries. Alternatively, it may
be located in only one market while accepting a full international account either through reinsurance
brokers or on a direct basis with its ceding companies. While some of these companies may have
ownership links with direct insurance companies, they operate largely on an independent basis.
Alternatively, some of the major direct underwriting groups have subsidiary companies which operate as
professional reinsurers. Part of the function of these subsidiaries would be to coordinate and administer
both the inwards and outwards reinsurance interests of the parent company and other group members.
Major professional reinsurers are involved with all forms of reinsurance which is derived from a variety of Reference copy for CII Face to Face Training
sources, using intermediaries as well as direct connections with potential ceding companies. There are
occasions when such reinsurers have to limit their commitments to a reinsured in order to control their
aggregation of exposure from direct insurance writings as well as reinsurance acceptances.
As a result of their considerable expertise built up over a number of years during which they have
established direct links with their clients, an advantage professional reinsurers can offer is technical
assistance in connection with underwriting, claims handling and accounting as well as the provision of
training for their clients’ staff.

D2 Lloyd’s syndicates

Many of the individual syndicates in the Lloyd’s market are important sellers of reinsurance – relying on
Rely on Lloyd’s
brokers to bring in Lloyd’s brokers to bring in business. Within that market, there are major syndicates that will quote and
business lead risks as well as other syndicates that offer a considerable amount of supporting capacity.
For Lloyd’s as a whole, the gross written premiums derived from reinsurance represent the largest single
category reported in its market results.
Activity
You can visit www.lloyds.com to see the latest market results.

Apart from the importance of reinsurance business to the Lloyd’s market, you should note that Lloyd’s
has a long-established reputation for the acceptance and development of various forms of reinsurance.

D3 Direct insurance companies

On a worldwide basis there are many direct insurance companies that also accept significant volumes of
reinsurance business as an adjunct to their main business. The scale and methods of their involvement
with reinsurance business vary as considerably as the types of companies themselves. Some small
domestic insurers may restrict their reinsurance activity to reciprocal exchanges only. Other domestic
insurers are prepared to underwrite an international reinsurance account, most of which will be acquired
through brokers.