Reinsurance as a Method of Managing the Risks of an Insurance Company's Bankruptcy

May 19, 2026

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Key Points

The aim is to explore strategies that mitigate the bankruptcy risks for insurance companies through reinsurance.
Employs probabilistic analytical models treating insurance claims as independent random variables.
Utilizes mathematical expectation and variance to derive solvency conditions under proportional and non-proportional reinsurance schemes.
Analyzes optimization problems to minimize bankruptcy risk and maximize growth of the insurance fund.
Derives analytical equations showing reduced probability of insolvency and growth of the insurance fund based on retention levels.
Identifies practical viability of applying proportional and non-proportional reinsurance types.
Establishes relationships ensuring both reduced insolvency probability and positive fund growth under relevant constraints.

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Examines reinsurance strategies to reduce insolvency risks in the insurance sector, suggesting improved stability.

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Tikhomirova et al. (2026) studied this question.

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