Mystic offers a variety of due diligence services for reinsurance agreements
from start to finish on a consulting basis. We are your one-stop reinsurance
Mystic can assist in projecting the financial flows of a proposed reinsurance
transaction. Our actuaries can test the reinsurance under various scenarios.
These tests will demonstrate that the treaty will be in compliance with
“transfer of risk” regulation issues. But most importantly ceder and reinsurer
will have clear understanding of the expected results at the onset of the
Treaty Reviews ~
would encompass the review of any current or proposed treaty for accuracy
in fairly representing the intentions of the parties, compliance with current
or proposed State Regulations, inclusion of all reasonable and necessary
protections and their enforceability, and then recommendations and negotiations
of such changes when needed.
Accounting Reviews ~
for a treaty that’s already in place Mystic would review the actual accounting
reports and numbers passed between the parties. The purpose of this review
is two-fold. First, to determine that the accounting practices adopted
by the parties are accurately reflected in the treaty, and secondly, to
verify that the treaty’s “mechanics” are correct. We will note any unusual
or irregular occurrences in the accounting that may indicate the need for
a more expansive audit protocol.
Financial Analysis ~ would
encompass any projection of an existing treaty under various scenarios.
Based on the reinsured policies’ past experience and employing accepted
actuarial principals, our actuaries are capable of producing any number
of models to demonstrate the effects of a given set of actions. For example,
what are the effect of terminating a treaty for new business or the effects
of an immediate recapture.
On-Site Audits ~ recommends
annually the complete verification of the ceder’s reporting to the reinsurer
by examination of the books, records and papers of the ceder. Mystic would
review and verify the methodology as well as the results of key items such
as reserves, underlying claim payments, accounting procedures and the computer
systems that generate the reinsurance reports.
Arbitration ~ unfortunately,
sometimes reinsurer and ceder are unable to resolve disputed issues among
themselves and as a last resort a treaty will end up in arbitration. Mystic
is well qualified to be your resource as either an arbitrator or an expert
Summary ~ Mystic
can assist you whether your organization acts as ceder or reinsurer. With
Mystic’s support you can be assured that you will have a firm grasp of
any life reinsurance treaty or reinsurance program for which you are responsible.
With the rapid promulgation of reinsurance regulation over the past few
years, our due diligence process is a must addition. In today's evolving
reinsurance environment, uncovering any error or omission in your reinsurance,
earlier rather than later, can spell the difference between an amicable
resolvement and arbitration.