21.1 Introduction
Value of reinsurance
Naive calculation: Sum(cash flow over contract length)
(-) Premium and reinstatement
(+) Ceding comm and reinsurance loss
\(\hookrightarrow\) Will always show reinsurance is a bad deal especially after discounting the cashflow
Make sense since reinsurers need to make a profit
Cases where it’s “profitable” to the cedant, it’ll either be repriced or the cedants results are really poor