GLWB Reinsurance Cost Index – comparability and full cost control
Munich Re draws on 140 years of strength and expertise to offer GLWB reinsurance as a preferred risk management solution. The GLWB Reinsurance Cost Index (RCI) provides an estimate of the total reinsurance cost for a hypothetical Guaranteed Lifetime Withdrawal Benefit (GLWB) rider, expressed in annual basis points of Guaranteed Benefit Base. At each date we estimate the reinsurance cost for newly issued policies; this allows for easy comparison across time, as changes in equity market levels do not directly impact the RCI calculation. The RCI is an “all-in” cost, inclusive of Munich Re’s margins for expense, profit, liquidity, cost of capital, etc.
Market Risk Only vs. Full Coverage
The GLWB Reinsurance Cost Index represents the estimated cost of reinsuring the GLWB rider, expressed in annual basis points of Guaranteed Benefit Base. Two distinct RCI values are computed for each valuation date: Market Risk Only and Full Coverage. Track the performance of both index values via Bloomberg Ticker MRCIVWBM Index and MRCIVWBF Index.
Choose the GLWB reinsurance protection that works for you – or anything in between!
You can select among three stages of reinsurance protection covering Market Risk Only, a Hybrid Solution or a Full Coverage. Pick and choose what meets your risk management needs best.
Costs for Market Risk Only can be tracked on Bloomberg via the MRCIVWBM Index.
- Similar risk protection to a complete hedging program covering all relevant greeks.
- Transfers equity, interest rate, volatility, liquidity, correlation, and operational risks.
- Relieves ceding company of some risks that it otherwise retains with a hedge-based solution.
- Bespoke level of coverage achieved through structures designed to allow you to pay only for the risks you want to cover.
Costs for Full Coverage can be tracked on Bloomberg via the MRCIVWBF Index.
- Transfers all risks that are included in the Market Risk Only structure.
- Also transfers non-hedgeable risks including mortality, behavior, and basis risks.
- Post-claim longevity risk is retained by ceding company – reinsurance claim paid as lump sum.
Head of Origination Financial Solutions North America
Munich American Reassurance Company