The reinsurance industry is a secondary industry. It exists to serve the needs of a primary insurance industry: so trends in insurance are likely to change the kinds of products which insurance companies need from reinsurers. This Masterclass focuses on the buyers of reinsurance - the primary insurers, whose world is rapidly changing - and shows how reinsurers need to position themselves to continue

to attract insurers' premium.

At the end of 2009 the reinsurance industry was a confident and optimistic one. A succession of major natural disasters during 2010, however, rocked the industry and since then both competition and regulation have intensified. In this first masterclass of a series of seven, we analyse the current state of the reinsurance industry and suggest strategic responses to the current competitive climate.

This paper proposes a stochastic model for loss reserving based on incremental reported claim numbers and paid amounts, and which serves to predict Reported But Not Settled (RBNS) and Incurred But Not Reported (IBNR) claims separately. The paper takes the approach of building a model for aggregate paid claims from basic principles at the level of individual data. The research suggests that the use of the aggregated counts data can improve reserving accuracy.

This paper presents an extension to the model for forecasting outstanding claims liabilities, formulated by Verrall et al. (2010). The resulting model is closely related to the chain ladder method. So close in fact, it is possible to produce exactly the same results, if a particular choice is made about the way the estimates are obtained. This raises the question of why a new method is necessary. This research puts forward several answers.