Financial Performance and Risk Management Overview
PRUDENT APPROACH TO RESERVING AND REINSURANCE
PRUDENT RESERVING PRACTICES
ROBUST REINSURANCE FRAMEWORK
•
Closely monitor adequacy of reserves
• Favourable prior year development (PYD) (1) in 9 out of 10
years between 2013-2022
• 2013-2022 average favourable PYD of 1.7% (2)
Structured to provide protection against individual large
losses and catastrophe events above a certain threshold and
to assist with mitigating underwriting risk
97.7% of the Company's reinsurers have a credit rating of "A-”
or better, as of December 31, 2022
4.0%
2.0%
0.0%
10-YEAR PYD (1)
10-Year average:
favourable 1.7%
(2.0%)
2013 2014 2015
2016 2017
2018 2019 2020 2021
2022
Restated
In 2023 the upper limit of our Excess of Loss structure increased
from $1.8 billion to $1.95 billion to support growth capacity. We
retain participations on reinsurance layers between the retention
and maximum limit averaging 8.6% for 2023 (2022: 3.4%)
including an average of 42.5% between the retention and up to
a $100 million loss (2022: 0%).
To mitigate against the volatility of catastrophe events we also
continued with our 100% placement of the catastrophe
aggregate treaty in 2023 on the same terms as 2022.
1. This is a supplementary financial measure, non-GAAP financial measure, or a non-GAAP ratio. Refer to Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios advisory and
Section 12 Supplementary financial measures and non-GAAP financial measures and ratios in the Q1-2023 MD&A for further details.
2. Favourable (adverse) development on prior year claims, undiscounted. The years of 2013-2021 are under IFRS 4 and full year 2022 under IFRS 17.
definity.
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