Fall 2018 Q14 - Reinsurance Assumed

mary_mmary_m
in Odomirok.8-9-IS

Hi,

How do we know when we need to add Reinsurance Assumed for liability calculation (in this case- unpaid loss) and when it's already included and doesn't need to accounted for (so that it's not double counted)?
If possible, could you refer me to any source material that touches on Reinsurance Assumed?

Thanks!

Comments

  • Staff - ACStaff - AC

    Reinsurance Assumed is treated differently in different parts of the Annual Statement. In the Income Statement, it is already included in the Net figures displayed. In Schedule P, where it is separated into its own columns, it is meant to be added to Direct to come up with Gross, and then, ceded/recoverables are subtracted to arrive at Net. This procedure may be implied in places where Reinsurance Assumed is labeled separately. However, Odomirok Cpt. 10 (Notes to Financial Statements) gets into some detail about Reinsurance Assumed.

  • mec06emec06e
    edited October 2022

    I'm getting a bit turned around in the examiner's report

    part a is calculating the net losses unpaid and it looks like this includes both Loss & LAE

    part b is calculating the net loss inc = paid loss + the change in reserves
    The header for Part 2 says losses paid and inc - no mention of LAE
    at this point I feel the solutions is saying that there is ALAE in both of the top 2 tables - otherwise the the change in reserves has the Total unpaid loss & ALAE but only subtracting out the unpaid loss from prior years (what about the prior years unpaid ALAE)

    but then for part c it subtract out the total incurred loss from part b & the total incurred ALAE (but isn't that included already in part b)?

  • mec06emec06e
    edited October 2022

    or are they saying the second tables titled: "part 2A - Unpaid loss and Loss Adjustment Expenses" with the headers below it being:
    "reported losses" & "Incurred bit not reported"
    are these only loss (though that's bit misleading since the IBNR doesn't say anything about loss)

    which would mean both parts a & b are calculating the loss portions only

    and then in C we still need to remove the LAE

  • Staff - ACStaff - AC

    Your second message above has the correct interpretation. ( I guess it's true that the "IBNR" heading is a bit misleading.)

  • mec06emec06e

    yeah I was really focused on those heading so I was getting all twisted around trying to pull out just indemnity data.

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