To help our clients succeed, Collins provides services and consultation that go beyond the basic role of a reinsurance broker. In today's marketplace, insurers face increasingly complex standards and requirements from regulators and rating agencies. Insurance company executives must make strategic decisions on such matters and capital allocation, or on determining the markets or lines of business in which their companies will compete. And they must remain informed and current on rulings, trends and other factors that can affect an insurer, its reinsurers and the industry in which it operates.

To help meet these and other challenges, Collins' offers the services of experienced financial consulting experts who offer such capabilities as:

• Analytical expertise to help meet the requirements of rating agencies; for example, in advising a company on its Best's Capital Adequacy Ratio (BCAR) score, or in assessing the firm's level of risk transfer.
• Personal connections and introductions with individuals who can assist with mergers, acquisitions or other strategic actions.
• A sound methodology for assessing the financial security of reinsurance markets and the experience of their executives, to help ensure confidence in the reinsurers on a company's program.

Collins' Financial Consulting services professionals apply their expertise and insights to help insurers meet the evolving requirements and challenges of today's marketplace.

Our financial consulting services include:

A.M. Best consulting

Collins helps clients prepare for their interaction they have with A.M. Best Co. as part of their financial strength rating process. A team of experienced Collins professionals with financial, mathematical and actuarial backgrounds meets with client management teams to evaluate your current rating, review your current presentations, discuss the company's Best's Capital Adequacy Ratio (BCAR) and Quantitative Analysis (QAR) reports, share trends developing at A.M. Best, provide advice as to ways to improve your current rating and, if requested, accompany the management team to Best's Oldwick, N.J. headquarters

BCAR modeling

Collins has developed a propriety model that can identify the potential impacts on a company's Best's Capital Adequacy Ratio (BCAR) score from contemplated changes in the firm's reinsurance program and other aspects of your business. We believe it is important for companies to understand the possible impacts on their BCAR score from different reinsurance options. In addition, the BCAR score is one factor considered by A.M. Best in assigning a company it's financial strength rating. In utilizing our model to deliver the analysis, Collins can also offer information on the changes that might be required in a company's surplus or net required capital to maintain or improve its BCAR score.

Financial advisory services

With its contacts, background and reputation in the financial community, Collins executives provide a variety of other financial advisory and intermediary services to clients, including:

• Capital raising. Collins' Financial Consulting team has relationships with several of the leading private equity firms focusing on the insurance industry. These relationships enable us to partner with clients who may need to raise capital to fuel growth or strengthen their balance sheets We assist clients in evaluating various capital raising strategies - whether debt or equity - and the impact such strategies may have on ratings, earnings and reinsurance needs in the future.
• Acquisitions. We frequently learn of cases in which a client or prospect is seeking an investment in his or her company, or an outright sale, and can make other clients aware of such opportunities.
• Facilitating strategic business moves. This has included, for example, helping clients gain access to primary blocks of business; providing introductions or consulting services for clients looking to exit or sell blocks of business; aligning clients with strategic partners, to help them expand into new products or territories; and helping to facilitate profitable relationships between insurers and managing general agents.

Counterparty Security committee

Collins' Counterparty Security Committee reviews market and financial information on reinsurers that are on Collins' Counterparty Security List. While we cannot guarantee the financial strength or solvency of any reinsurer utilized, we seek to reasonably ensure that our clients' reinsurance is placed with secure and solvent reinsurers. While no set criteria mandates that a reinsurer be added to or removed from the list, the committee considers a series of reinsurer reports and financial figures and ratios pertaining to such items as: business profile, financial performance, investments and liquidity, capitalization, reserves, management and ratings. The committee desires to see reinsurers meet the following minimum criteria:

• $500 million of capital and surplus
• Ratings of A- or higher from A.M. Best and/or Standard & Poor's, and
• Examination by the committee of the experience of the reinsurer's management.

Evaluating the experience of management goes beyond stated financial data and published agency ratings. We collect and examine market intelligence to identify reinsurers that, while meeting minimum solvency requirements, may encounter additional pressures in the future.

Collins' provides financial analyses of the strength of various reinsurers to our clients. Our team reflects analytical skills from finance, accounting and auditing; and economics and actuarial backgrounds with specialist knowledge of the insurance and reinsurance industry. Our accounting and claims professionals monitor payment patterns of reinsurers; if patterns change, they seek to determine the reasons behind such changes, and whether they are due to such factors as financial stress.

Our analyses allow us to assess the likely impact of negative trends on a reinsurer's financial position in advance of the response from financial ratings agencies. This enables us to offer timely and relevant information to our clients or to identify adverse trends or problem areas for individual companies.

We produce financial reports on reinsurance companies and Lloyd's Syndicates that are approved to be on our Counterparty Security List. Our Counterparty Security Reports are produced based on technical industry research and analysis using information not only from major financial ratings agencies, such as A.M. Best, Standard & Poor's and Moody's, but also direct financial information obtained from the reinsurance companies. To access a Counterparty Security Report on a specific reinsurer, see the Resource Center.

Risk transfer testing

Insurance company management, auditors and regulators require the assurance that a decision regarding reinsurance meets the risk transfer requirements under NAIC's SSAP #62 and FASB's Statement #113. Collins actuaries can perform analyses for clients to gauge whether such decisions meet the accepted parameters and definition of risk transfer.

Peer group analyses

Insurers can glean important information from reviewing the operational and financial metrics of peer companies. Clients can either provide Collins with their own list of peer companies or have Collins research and locate the optimal peer group based upon a variety of financial characteristics. Once a peer group has been compiled, Collins provides historical and current information to clients in customized peer group reports which examine and compare companies within the peer groups according to such variables as:

• Business profile: size, lines of business, territories
• Profitability measures: loss ratios, investment ratios, ROE, etc.
• Leverage measures: business retention, ratio of net premiums written to policyholders' surplus (PHS), ratio of ceded premium to net leverage, etc.
• Capitalization measures: risk-based capital ratios, BCAR, changes in PHS
• Assets and liquidity measures: liquidity ratios, cash flow, invested assets
• Loss reserves: development trends
• Reinsurance recoverable and retention analysis
• Ratings distribution: AM Best, Standard & Poor's