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Wholesale reinsurers contractually accept all or a portion of the risks that a direct insurer assumes by way of insurance agreements or other legal arrangements. This benefits direct insurers with respect to various considerations, including:

• enlarging their underwriting capacity;
• helping to stabilise underwriting results;
• bringing catastrophe protection against shock losses;
• giving access to reinsurance market knowledge and to many kinds of services, including actuarial work, risk evaluation and assessment, analysis of underwriting data and the compilation of information on a worldwide scale, providing loss adjustment services, loss prevention consulting, etc.).

Often, wholesale reinsurers are asked to accept highly exposed risks, severely hazardous business and catastrophe risks and in consequence they must be careful to balance their portfolio of activities.

Over 260 reinsurance undertakings are domiciled in Luxembourg. The market is dominated by captive reinsurers with just a handful of wholesale reinsurers  established in the Grand Duchy. This sector is expected to grow in the near future.

Wholesale reinsurance companies are regulated by the Law of 6 December 1991 on the insurance sector, as amended, and by the Grand Ducal Regulation of 5 December 2007 concerning the conditions for authorisation and carrying on business for reinsurance companies, as amended. They are subject to regulatory control by the Commissariat aux Assurances (CAA).

Practical guide:
How to set up a reinsurance company