SAP retro reinsurance

"Any gain from the reinsurance is treated as a write-in gain in other
income and restricted as special surplus until the actual paid reinsurance recovery is in
excess of the amount paid for the reinsurance" >> what happens after "paid reinsurance recovery is in
excess of the amount paid for the reinsurance"

Comments

  • edited October 2019

    Special surplus cannot be used to pay dividends (along with various other restrictions). The implication of what you quoted seems to be that once the recovery exceeds the amount paid for reinsurance, the gain would be moved out of special surplus and into "regular" surplus. It then becomes available to pay dividends, among other things. I couldn't find a whole lot more in Odomirok about this,

  • Ooh I see. Thank you.

  • I am confused about why the wiki says there is no change to regular surplus since the SAP retrospective gain will be treated as special surplus. On the balance sheet I see line 29: Aggregate write-ins for special surplus funds, which includes the special surplus from retro reinsurance, and the final calculated surplus includes this line.

  • Wiki is distinguishing between regular and special surplus, because special surplus is not available for dividends. Further down in the 2017.F.12 answer, wiki does say surplus (meaning total surplus) increases, but by way of special surplus.

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