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The costs and benefits of reinsurance with respect to the cost of capital
(Strathmore University, 2014-03) Owen, Otieno Kelvin
Reinsurance is a risk management tool that comes at a cost to the insurance companies. This is a report on the research of the costs and benefit of reinsurance with respect to the cost of capital. The introduction explains the meaning of reinsurance and how it relates to the primary reinsurer. Chapter two gives the literature review on the research that has been done on the costs and benefit of reinsurance and the relationship between cost of capital and re-insurance. The next chapter gives the methodology that was used to come up with the data, analyze the data and come up with the conclusion of the report. Chapter four outlines the findings of the report while the last chapter shows the conclusion of the report. This report reveals that the cost of capital although changes at an unpredictable way to changing reinsurance levels the value of the cost of reinsurance is directly correlated to it. It also shows that the cost of capital for the insurer reduces with respect to taking reinsurance by the Insurer