Réflexions sur la réassurance par Patrick Thourot

This article aims at presenting a broad vision of the reinsurance industry economic model. In fact, reinsurance plays the role of “lender in last resort” in the insurance system, which means that it provides liquidity and necessary capacity to create insurability of most risks, by building up mutualities in space and time for extreme risks. Therefore, the business model is basically founded on risks diversification by nature of risks (Life and Non-Life), by geographical localization, and through optimal structuring of the portfolio, taking into account the available equity and the economic capital required. Whereas the Industry has faced an important movement of concentration during the last three decades, the barriers to entry, which should result from this concentration, do not seem to have discouraged the building up of new reinsurance companies, entering the market from Bermuda. Reinsurance now is strongly regulated in the US, Asia, and Europe.

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