Program terms
Select Terms in the Company Detail Programs tab to enter treat terms for a program.
When entering treaty terms, click Add Layer to add reinsurance layers to the program (excess of loss, per-risk and catastrophe bond programs only). Each layer can have one step layer if necessary; click Add Step Layer. A step layer is used to assign a separate set of treaty reinsurance terms that are linked to those on the primary layer. The step layer is triggered only when the primary layer has been exhausted.
The following fields are found on the Terms tab. For programs that can have layers (excess of loss, per-risk and catastrophe bond), you can set the applicable terms layer by layer.
|
Field |
Description |
|---|---|
|
Contract Name - or - Name (for catastrophe bond programs) |
The name of the contract or bond. This name should be unique. |
CUSIP |
For catastrophe bond programs only, the unique Committee on Uniform Security Identification Procedures (CUSIP) identifier for all catastrophe bonds issued in the United States and Canada. |
|
Occurrence Limit - or - Max Occurrence Contrib (for catastrophe bond programs) |
The maximum loss that can be incurred by a layer from a single occurrence. If the field is left blank, this specifies no occurrence limit/contribution.
Touchstone Re supports binary payout functionality for all program types. Events meeting parametric and/or loss trigger thresholds can be forced to pay the full occurrence limit, regardless of the actual company loss for the event. This is accomplished by specifying an occurrence limit, selecting the ellipses button immediately to the right of the occurrence limit field, and enabling the Match Loss to Limit functionality. Events that produce company losses that exceed the occurrence retention will produce full limit occurrence losses.
Prior versions of Touchstone Re could require the user to inflate losses using a Loss Modification Factor to ensure the company loss for all qualifying events was high enough to reach the occurrence limit. Without the inflation, Touchstone Re would only pay up to the company loss, possibly understating losses.
Treaties with the Match Loss to Limit Functionality enabled can be quickly identified using the Match Loss to Limit column in the Treaty List export. |
|
Occurrence Retention - or - Occurrence Attachment (for catastrophe bond programs) |
The value below which occurrence losses are not assumed by the layer. If the field is left blank, this specifies no occurrence retention/attachment. |
|
Aggregate Limit - or - Layer (for catastrophe bond programs) |
The maximum loss that can be incurred by the layer across all occurrences within each year. If the field is left blank, this specifies no aggregate limit. Applicable only to ground-up, quota share, aggregate XL and catastrophe bond programs. |
|
Aggregate Retention - or - Aggregate Attachment (for catastrophe bond programs) |
The value below which the year’s total occurrence losses (otherwise recoverable) are not assumed by the layer. Blank specifies no aggregate retention. Applicable only to ground-up, quota share, aggregate XL and catastrophe bond programs. |
Multi-Year Reset Date |
MM/DD. The Reset Date excludes year because the Aggregate Retention will reset on that date for each year of the contract's length. |
Risk Limit |
For per-risk programs only, the maximum loss that can be incurred by the layer for any one occurrence. If the field is left blank, this specifies no risk limit. This value is not considered in analyses. |
|
Risk Retention |
For per-risk programs only, the value below which the total losses are not assumed by the layer. If the field is left blank, this specifies no risk retention. This value is not considered in analyses. |
|
Applies To Areas - or - Covered Areas (for catastrophe bond programs) |
Opens a dialog box where you can specify the region, area and subarea exposures that apply to the layer; refer to the topic Applies to Areas for more information. |
|
Applies to Events - or - Parametric Triggers (for catastrophe bond programs) |
Opens a dialog box on which you can specify the events, based on an event parameter and/or location, that should be considered in a contract/bond analysis; refer to the topic Applies To Events for more information. |
Reinstate |
The number of times the layer may be reinstated during the contract year. Not applicable for catastrophe bond programs. |
|
Status - or - Investment Status (for catastrophe bond programs) |
The status of the layer: Submitted, Authorized, or Bound. |
Coinsurance |
The portion of the losses to the layer that are paid by the reinsurance program. If coinsurance is 100%, then the entire layer loss must be paid by the reinsurer. A value of 60% indicates that 60% of the layer losses are paid by the reinsurer and that the remaining 40% are retained by the issuing company. Not applicable for catastrophe bond programs. |
|
Gross Participation |
The percentage of the losses to be assumed by the reinsurer. Not available for catastrophe bond programs. |
|
Net Participation |
The company’s net participation in the layer. Since the reinsurer may participate in a layer and then cede a portion of that participation to another reinsurer, the net participation indicates the actual amount that the original reinsurer is liable for. Not available for catastrophe bond programs. |
Principal Amount |
For catastrophe bond programs only, the principal amount associated with the bond/layer. |
Investment Amount |
For catastrophe bond programs only, the investment amount associated with the bond/layer. |
Annual Spread % |
For catastrophe bond programs only, the coupon spread for the bond/layer over LIBOR. |