Business Need 
A large reinsurance pool in run-off sought commutation services related to their retrocession program which spanned more than 20 treaty years. The ceding pool’s reinsurance structure was complex, with multiple layers and multiple reinsurers which varied by any given treaty year and/or layer. Certain reinsurance treaties additionally contained mandatory commutation clauses that specified commutation undertakings at a specified period of time.

Situation Analysis
Paragon’s initial approach included the analysis of the reinsurance structure to determine which IT platform was best for storing, updating, and retrieving reinsurance records. Additionally, we needed to develop a strategy that would provide a means to evaluate and calculate commutation values (including analysis of reserves), disburse commutation proposals to the market in keeping with the mandatory commutation clauses, as well as provide negotiation support to conclude the commutations.

Paragon's Action 
Paragon structured a timeline and process to ensure commutation proposals would be disbursed on a timely basis in line with the treaties. We analyzed the pool’s underlying claim data, performed actuarial calculations to determine appropriate commutation values, distributed the proposals to each of the reinsurers on over 100 treaties, and devised a team plan to best conclude the commutations.

Results 
Through our structured and methodical approach, Paragon has successfully facilitated and concluded commutations with volumes of reinsurers, resulting in over $50 million in commutation proceeds received to date.