Allianz-Tiriac takes profit over reinsurance

The largest general insurance company in Romania, Allianz-Tiriac, has announced plans to substantially reduce the volume of premiums ceded to reinsurance companies. This is a strategic move, as the company used to promote ceding a substantial part of the premiums to reinsurers, and is intended to maximise profits. Reinsurance is the insurance insurers buy from other companies in the field and is paid for by ceding part of the gross premiums collected from insured clients. When the event insured happens, the reinsurer contributes to the settlement. How much an insurer chooses to cede to a reinsurer is up to its policy: if it feels it needs more protection, it transfers more to reinsurers (or “retains” less risk, as those in the business put it), if not, it cedes less. The amount of premiums ceded to reinsurers has a bearing on the profit (the more retained, the higher the profit), particularly because reinsurance costs have increased a great deal lately. ZF