2017.Spring 13 b ii Non-Sch P Ceded - Example with 3 Pooling Companies
Could you provide an example where there is 3 companies in an intercompany pooling agreement and calculate non-Sch P gross, ceded, and net?
I have not been able to find any examples with 3 companies and the ceded calculations and am not sure how to calculate the lead company ceded when there is more than 1 non-lead. Is it just the sum of total gross amount * each non-lead company's pooling %, e.g. (total gross * B pool % ) + (total gross * C pool %) ?
Am I right in assuming the ceded for the 2 non-leads just equals their gross/direct amounts?
Thanks!
Comments
There is an example in the wiki article for Odomirok.15-P that I think might answer your question. It is a green button above "mini BattleQuiz 7". You can get to it quickly using the link below:
Let me know if that doesn't answer your question.
Is there a reason that the losses in part a that get shared between the companies only fall under "direct and assumed" but the ceded amounts are 0, but in part b the premiums that get shared do count as being ceded?
That's part of why this problem is a little confusing. There are 2 types of cession that are possible here.
The exam problem this problem is based on specifically says there is no reinsurance or pooling other than among themselves. That's why the ceded columns representing outside reinsurance are all 0 in the statement of the problem. In the solution however, the ceded amounts represent something different: they represent ceding/sharing/pooling among themselves. You just have to keep these 2 different types of cessions clearly in mind for the solution to make sense.
Ok I see where my confusion came from, I misread the problem the first time through. Part a asks about Sch P and part b asks about other financial statements, and it seems that Sch P treats intercompany pooling differently and other financial statements just treat it as regular reinsurance.