Upravljanje rizicima društava za neživotno osiguranje i reosiguranje primjenom tehnike sekuritizacije
Risk management of non-life insurance and reinsurance companies applying securitization technique

Summary/Abstract: This paper analyses characteristics of securitization instruments and their importance in managing the actuarial risks of non-life insurance and reinsurance companies. Although various risks could be transferre to the capital market by securitization, the most significant among the securitized risks are risks associated with catastrophic events for which insurers/reinsurers cannot diversify within their own insurance/reinsurance portfolio. The possibility of expanding risk transfer capacity, reducing credit risk exposure, hedge against the fluctuation of the risk transfer price, improving capital management and improving performance, are the main benefits that insurers/reinsurers can achieve with this risk management technique. However, when making decision on the application of this technique in risk management, these advantages should be compared to the disadvantages. Depending on the applied trigger of the transaction, disadvantages include base risk, liquidity risk and obligation to disclose information about insurance portfolio, which ultimately determines the price of the transfer. Compared to reinsurance and retrocession, securitization is of little importance for risk management. However, considering the increasing extent of catastrophic damage, and the possibility of applying this technique to other risks, increase in importance of this technique in the risk management of insurance/reinsurance companies could be expected, but only as a complement to reinsurance and retrocession, not as their alternatives.

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