Premium Portfolio Reinsurance vs Loss Portfolio Transfer

kulotuskulotus
in Odomirok.14-F

Can you help me understand the difference between a "Portfolio Reinsurance Arrangement" (Odomirok Sch. F - Pt. 2) and a Commutation or Loss Portfolio Transfer (Klann.ReinsComm)?

Comments

  • Staff - ACStaff - AC

    Commutation is the ending of the insurer-reinsurer relationship regarding a certain contract. It essentially means the selling of the remaining contract loss reserves on reinsurer's book by the reinsurer back to the insurer. (Reinsurer pays to make this sale, because the item sold is a liability, not an asset.)

    The "portfolio reinsurance" in F Part 2 is the transfer of the entire risk (all of the premiums and losses) from the insurer to the reinsurer for a distinct book of business. This is done for the purposes of "fronting." Part 2 lists all such transfers effected or cancelled.

    So the scales of these two are different and their directions are reverse.

    I saw that Odomirok section on F Part 2 does not even provide an example. It's fair to assume you don't need to worry much about F Part 2.

  • kulotuskulotus

    Thank you!!

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