You do add in the credit risk of the reinsurer to your total enterprise risk, but given the relative credit rating of direct insurers and reinsurers, this is pretty marginal for almost all insurers. Depending on your financial reporting basis, there is likely to be some more work there in valuing liabilities and a reinsurance asset and the related disclosures. The regulator may also require approval of the reinsurer or the reinsurance programme, and there will always be some administrative overhead in setting up the treaties or negotiating facultative terms on a case-by-case basis.

Reinsurers can also provide some valuable services through underwriting manuals and pricing, but this can’t be considered as a separate benefit because it is ultimately priced into the reinsurance rates either implicitly or explicitly.

Reinsurance is a great area for discussion – I’ll be sure to blog about it in the near future.

(came from David Maister’s site)