Reinsurance Commutation Analysis
Finance Finance Ops Executive Insurance
The prompt
$18
Why this works
Present value comparison is the only financially rigorous way to evaluate commutation — face value comparison systematically overstates the value of holding long-duration ceded reserves.
Risks & review
Commutation is irrevocable. The decision requires board or executive approval, and the loss of ceded IBNR protection should be stress-tested before the decision is finalized.