As 2024 comes to an end, our Managing Director Ana Mata, reflects on a year of challenges, accomplishments and lessons learned at MatBlas, offering a candid look into the dynamic world of reinsurance and training.

52 down, 25 to go… If you work in reinsurance you will understand!

This year I took on the biggest challenge of my reinsurance career – MatBlas agreed to price a maximum of 100 treaties for a number of reinsurance clients. Six analysts/data technicians, one project manager and I thought… can it be done?

Well, if the submissions were all available on October 1 this would be a walk in the park, the challenge is not knowing what the day brings as priorities can change by the minute.

We have completed pricing with FOTs, RARC and documentation for 52 deals (files are looking pretty tidy!), with 25 to go – maybe more will come, who knows? Not much sleep between now and the New Year, maybe on Boxing Day – but then again the US and Bermuda will be open for business, so maybe not!

23 reinsurance pricing seasons and counting!

In 2021 I made the decision that 20 reinsurance pricing seasons was a good time to retire from reinsurance, but I can’t help it – I LOVE reinsurance! After 23 seasons, every deal brings new learnings and new challenges.

What has not changed much is the process…

Incomplete submissions, no rate changes, no triangles, premiums that do not match claims, no policy limits at claim level – 23 years on and it’s the same process.

In general there have been improvements, but not 23 years’ worth of improvements and a lot of inconsistencies remain among brokers on how things are presented.

Manual processes taking hours, cleansing and formatting data from multiple excel files to load clients’ models in all shapes and forms, often multiple files to price one programme due to model limitations.

We also still get delays with brokers sending submissions (some arrived this week!), some have sent FOTs without sending the submission first (they forgot!).

The usual ‘As If-ing’ conversations, we are not writing this anymore, limits have gone down, appetite has changed etc. There should be a rule in this business that all accounts that need careful ‘As-If-ing’ considerations must be submitted in August when it is quiet and conversations and deep dive analysis can take place, not in the middle of the end-of-year chaos!

The impact of inflation

What is a reasonable inflation assumption for this class/territory? That’s been the one-million-dollar question this year!

Are we looking to the future or are we looking at the past? And what are we trending anyway? Is it ground up individual claims? Aggregate claims? Just the claim in the layer? What about the gearing effect of inflation from claims not in data? And over trending claims that are already at policy limit? Does inflation differ by size of loss? A 100k loss does not trend by the same amount over time than a 10m loss.

I have saved my favourite for last, the RARC (Risk Adjusted Rate Change). Are the rate changes in the submission gross or net of inflation? If net, what is the cedants’ inflation assumption, so we don’t double count?

For the reinsurer, is PLR (Priced Loss Ratio) to PLR the right approach to calculating the RARC? What about if claims experience is worse than expected, should this impact the RARC? Higher upfront rates at 15% brokerage vs paid reinstatements with no brokerage, do they impact the RARC? I bet each reinsurer will have a different view, but it’s all part of the chaotic process that I get hooked into every year.

This year the additional challenge has been training MatBlas’s next generation of reinsurance specialists.

They have been taught the first step to price a programme is to READ THE SLIP! They are also learning to take pride in their work, maintain tidy files and thorough, clear, concise documentation, anticipate questions, bring a pen and a pad to every meeting and be prepared.

Some days they love me, some days they hate me – I don’t mind because my job is to train them well and make them into the best insurance and reinsurance professionals they can be. That’s the legacy I will leave behind.

I take this opportunity to wish you all a Merry Christmas and a Happy New Year, here is to a successful year ahead!

Ana Mata