Over recent years commutation has become an increasingly important element of business strategies for both the run-off and live insurers and reinsurers. Risk Resolutions offers commutation solutions to companies and Lloyd’s syndicates whether they are seeking to limit exposures or accelerate their reinsurance/insurance asset collection.

The benefits of commutations allow clients to:

• Exit from certain lines of business and certain business relationships with unfavourable claims deterioration
• Reduce the potential for claims deterioration
• Prepare portfolios for reduction in preparation for finality such as sale
• Achieve balance sheet composition by releasing reserves.

At each stage of the project we ensure that we understand our clients business needs fully so that the commutation process can run as efficiently as possible. We will undertake a comprehensive analysis of the type of business in order to:

• Reconcile all aspects of the book of business, including open balances, known case reserves and IBNR.
• Establish and determine with the counterparty the exact number and characteristics of the policies that were written.
• Advise where necessary the impact that the commutation will have for the clients own reinsurance programme and how best to mitigate lost reinsurance asset.
• Assess the payout pattern, investment income assumptions and present value.

Risk Resolutions can ensure that the parties engage at an early stage to determine if they are willing to discuss a commutation and whether their data will assist productive negotiations.