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Cedants

Outsourcing recoveries

Account Analysis

London Market recoveries

US Domestic Recoveries

Technical Assistance

Dispute support

Commutations

Outsourcing recoveries

Reinsurance Recoveries require a constant level of attention to ensure timely and accurate billing, follow-up to confirm receipt and monitoring to ensure timely recoveries.

Gray Wolf can outsource this function either as a complete service or focused on specific elements, reinsurers, claims or lines of business.

Depending on complexity, volume and the needs of the client, fees can be arranged on a time basis, monthly fee or straight contingency.

We prefer arrangements on a contingency fee basis as this closely aligns our efforts with results for our clients.

There will be initial set up costs related to the establishment of data links between Gray Wolf and your company, in addition to establishing your required reporting criteria.

Account analysis

Reinsurance Accounting can be complex and time consuming and reinsurance receivables suffering from neglect can often quickly deteriorate into an accounting quagmire.

Without accurate information the ceding company or Reinsurer is unable to make good decisions on a proper course of action leading to poor decisions, or worse, more neglect and an ongoing downward spiral.

We offer a review service that will reconstruct an entire book of business, confirm all transactions have been accounted for and provide accurate information for management decision making.

This process can include a complete review of premium transactions and related cessions, commission calculations, any commission adjustments, reinstatement premium calculations where indicated, and any retrospective premium adjustments.

On the loss side claim cessions can be reviewed for accuracy, including proper accounting for SIRs and Salvage & Subrogation.

Inuring reinsurance can be verified and calculations checked for accuracy against the premiums deducted for the cover.

We have significant experience in common account reinsurance contracts and their sometimes Byzantine accounting.

London market recoveries

The London Market is constantly evolving. Broker and reinsurer consolidations have left the original line slip information seriously out of date. Brokers are constantly downsizing and outsourcing resulting in a new market for broker replacement services. Solvent and insolvent Schemes of Arrangement are progressing at a bewildering pace and the transfer of London Market business out of "EC3" continues.

For the last two decades Gray Wolf's principals have been recovering reinsurance from the London Market and remain frequent visitors and participants in the market. Through membership of the Association of Runoff Companies and a vast network of friends Gray Wolf stays plugged in to the London market and stays informed of changes which directly affect reinsurance recovery.

The nuances of claim presentation, negotiation and settlement with the London market are one of Gray Wolf's great strengths, especially those requiring a historical viewpoint.

Schemes of Arrangement and non participating players create special difficulties in recovering from London as do the many name changes due to M&A activity. Overseas players in the London market historically become reluctant to pay claims once they cease writing. We not only have collected directly from many such players but also enter into joint ventures with a few proven resources where their contacts and level of visits exceeds our own. We find this particularly useful in the Mid and Far East.

US Domestic recoveries

Reinsurance recoveries from the US domestic market continue to be more difficult each year. For cedants in runoff a recent PWC report indicates recoveries take over three months or more 90% of the time (note: statutory penalties kick in at 90 days), with 27% taking six months or more.

Needless to say this represents a significant loss of investment revenue and cash flow to the cedant.

In addition it appears US cedants rely on the US brokers to assist in recovering reinsurance to a much higher extent than their UK counterparts.

Gray Wolf has extensive experience in reinsurance recoveries in the US market and has been directly involved in complex ceded claims for decades. We have recovered claims involving all aspects of complexity including asbestos, pollution and other health hazard claims. In addition we have negotiated settlements with reinsurers where the original claim presentations have been disputed managing claim audits and resulting inquiries.

Commutation support

Although most cedants are reluctant to commute reinsurance contracts commutation as a strategy can be highly useful to a cedant for a number of reasons.

Commutation may be a better response to disputes than arbitration. If a particular claim or group of claims has tainted the reinsurer relationship and no ongoing business is being transacted among the parties a commutation may be the best solution to the problem.

Where the future financial stability of the reinsurer is in question a commutation now may in hindsight be a brilliant move resulting in the securitization of the recoverable asset.

For larger cedants, small reinsurance recoveries can incur large cumulative processing costs resulting in a significant deterioration in the value of the reinsurance asset. Commutation of all small reinsurers, especially those on old books of business may be economically justified by the reduction in transactional costs. This may also apply to entire contracts where the time and expense required to continue de minimis reporting can be curtailed via commutation.

We can assist in the entire commutation process from internal analysis and actuarial evaluation through negotiation and final documentation.

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