Reinsurance Simulator

Below is a live environment for R in which you can “Run” the code by hitting the green button. Feel free to change any of the inputs in the first lines to see what different results you get. The exercise here would be to try to improve the return on capital through the judicious purchase of reinsurance.

Some notes to help: The reinsurer will price the contract to achieve a 5% return on its capital therefore you will not be improving your return on capital if your gross return is already below 5% (this would result in ceding away net beneficial business). This is simulating an aggregate stop-loss, so the more predictable the aggregate losses are, the lower the relative ceded premium; try increasing the expected claim counts which produces a more stable aggregate distribution.

Solved can help you and your teams develop similar analyses but with much more sophistication and presentation quality and tailored to exactly the metrics and insights you value or want to investigate.