A commutation will assist two companies (cedant and reinsurer) to finalise known and unknown claims under a reinsurance contract by way of mutually agreeing to a lump sum payment. There are many reasons why the parties may wish to pursue this, but it will always demand a significant degree of analysis of the portfolio involved, and strong negotiating skills.

Hampden has successfully commuted liabilities with a large number of counterparties on behalf of third party clients and also on behalf of our own entities. We can assist with formulating a commutation strategy, setting targets for the individual transactions, analysing the underlying exposures and contracts, research the accounting position, and finally negotiate a settlement with the relevant counterparty.