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Retroactive Reinsurance Solutions

Build a better insurance business by managing reserve risk more effectively

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    The growing need for retroactive reinsurance

    Primary insurers face an ongoing challenge in optimising their risk and capital situation. This requires a sharp focus on maintaining adequate levels of technical reserves – both for ongoing business and run-off. Retroactive reinsurance addresses these challenges by the use of Loss Portfolio Transfer (LPT) or Adverse Development Cover (ADC), or a combination of both solutions, to optimise capital, facilitate operational efficiencies and provide balance sheet relief when you need it. The main reasons organisations like yours invest in retroactive reinsurance are to enhance balance sheet certainty, enjoy solvency capital relief, get rating capital relief, improve capital efficiency, access additional capital and to protect the business plan. 
    Matthias Grandel
    Matthias Grandel
    Head of Retroactive Reinsurance Solutions

    How retroactive reinsurance mitigates your reserve risk

    Typically, your reserve risk includes the risk of accelerated claims pay-outs and adverse development risk – whether incurred but not reported (IBNR) or incurred but not enough reported (IBNER). It grows when risks taken on in an insurance business accumulate faster than run-off obligations from the past can be resolved, which disproportionately impact results in a given financial period. Our retroactive reinsurance solutions protect organisations like yours from adverse reserve development and free up capital for more profitable application elsewhere in your business. 

    How you can benefit from retroactive cover

    Enhance effectiveness
    Retroactive reinsurance is a powerful capital and risk management solution, either on a stand-alone basis or in combination with other measures.
    Enjoy flexibility
    Coverage (attachment point, limit, etc.) can be flexibly geared to your needs.
    Build sustainability
    The effect of a retroactive cover on your capital position will be immediate and sustainable.
    Protect your capital
    On top of providing capital relief, retroactive reinsurance ensures protection against potential adverse reserve development.
    Ensure continuity
    With all claims handling activities remaining in your hands, you continue to be the one that interacts with your clients.
    Matthias Grandel
    Our retroactive reinsurance solutions protect organisations like yours from adverse reserve development and free up capital for more profitable application elsewhere in your business.
    Matthias Grandel
    Head of Retroactive Reinsurance Solutions

    Would you like to know more?

    No two businesses are the same which is why each retroactive solution is different

    We specifically tailor your retroactive solution around your business goals to optimise your risk protection efficiency as well as your capital structures and costs. Moreover, if your specific situation changes due to unforeseen circumstances (e.g., new government regulations or shifting markets), our structured solutions allow you to adjust quickly with minimum discomfort.

    Retroactive Reinsurance Solutions

    Retroactive Reinsurance Solutions

    Reserve risk consists of

    • Adverse development risk (IBNR/IBNER)
    • Risk of accelerated claims payouts
    • Retroactive reinsurance
    • Net unpaid claim reserves

    1. „Quota share“ on reserves

    • Reinsurer participates proportionally on future claims payments
    • Typically proportional transfer of upside and downside potential
    • Structure mainly used to harvest reserve redundancies, capital relief (factor-based models) or run-off portfolios

    2. „Aggregate excess of loss“ cover on reserves

    • Reinsurer assumes future claims payment above a specified retention
    • Cedent can retain upside potential
    • Structure typically used as „sleep easy“ cover, often combined with  „no claims“ bonus

    Tailormade retroactive insurance solutions

    • All our retroactive insurance solutions are structured on a case-by-case basis, adapted to the needs and targets of our clients
    • Additional features such as co-insurance, an in-the-money financing component or a loss corridor can be included
    • Further items such as a funds-withheld agreement or profit commission can also be considered

    Advantages of working with Munich Re for retroactive cover

    Turnkey reinsurance-based corporate finance solutions from a single source
    A flexible approach using instruments proven successful by clients around the globe
    Continuous exploration of new solutions for specific motivations arising in changing markets
    Support from custom-built Deal Teams interconnected with experts and Client Managers of Munich Re
    Streamlined client interfaces that ensure close cooperation and short response times
    Talk to our experts
    Matthias Grandel
    Matthias Grandel
    Head of Retroactive Reinsurance Solutions
    Judith Zeleny
    Judith Zeleny
    Business Development Structured Re
    Andreas Müller
    Andreas Müller
    Head of Origination
    Placement | ILS Investments
    Michael Roth
    Michael Roth
    Senior Manager Origination
    Public Sector