Schedule F: Reinsurance Provision

Calculate the total reinsurance provision assuming only 2 reinsurers A & B. (Modeled on 2017.Spring #14)

current score:

0.000

total provision
provision for reinsurer A
provision for reinsurer B
slow-pay ratio (enter decimal)
is B a slow-payer? (y/n)

miscellaneous information	notation	unauthorized reinsurer A	authorized reinsurer B
amount received: prior 90 days	Recvd
letters of credit (LOC)	part of C
ceded balances payable	part of C
other amounts due reinsurers	part of C

recoverables NOT in dispute	notation	unauthorized reinsurer A	authorized reinsurer B
Total reinsurance recoverable	Tⁿ
recoverable on Paid loss & LAE	Pⁿ
recoverable on Paid loss & LAE > 90 days past due	Pⁿ₉₀
recoverable on Paid loss & LAE > 120 days past due	Pⁿ₁₂₀

recoverables in dispute	notation	unauthorized reinsurer A	authorized reinsurer B
Total reinsurance recoverable	T^d
recoverable on Paid loss loss & LAE	P^d
recoverable on Paid loss & LAE > 90 days past due	P^d₉₀
recoverable on Paid loss & LAE > 120 days past due	P^d₁₂₀

Notation

RP = Reinsurance Provision, C = Collateral (other notation is listed in data tables above)

→ Collateral that is not under control of the insurer cannot be counted. An example of collateral that cannot be counted is: collateral held in trust with the reinsurer.

Unauthorized Reinsurer

= (T – C) + 20% x Pⁿ₉₀ + 20% x T^d <== capped by T

where

= Tⁿ + T^d

Time-saving TRICK: This formula for RP, including the cap, simplifies algebraically to:

= min( T – C + 20% x Pⁿ₉₀ + 20% x T^d , T )

(thx KB!)

Authorized Reinsurer

RP(not slow-paying)

= 20% x (Pⁿ₉₀ + P^d₉₀)

RP(slow-paying)

= 20% x max( T – C , Pⁿ₉₀ + P^d₉₀ )

==> slow-pay ratio

= Pⁿ₉₀ / ( Pⁿ + Recvd ) (Use slow-pay formula if ratio ≥ 20%)

Solution:

total provision
provision for reinsurer A
provision for reinsurer B
slow-pay ratio
is B a slow-payer?