General accounting question
For something like "Funds held by company under reinsurance treaties" being on the Liability side of the balance sheet, is that included or lumped in somewhere on the asset side as well? Maybe in invested assets, cash, cash equivalent, etc.? Just want to confirm that we are accounting for it somewhere.
Also, why would we not reduce "Funds held by or deposited with reinsured companies" to 0? Or are these companies that the insurance company in question is acting as the reinsurer for?
I ask this because when restating the balance sheet to be gross of reinsurance we reduce "funds held by company under reinsurance treaties" to 0, along with other items so I was wondering why that wasn't also getting restated on the Asset side of the balance sheet as well.
Fall 2017 #14 is the specific problem I am referring to if that helps at all.
Comments
1) Yes, "Funds held by company under reinsurance treaties" is matched by a portion of one or several of these assets.
2) "Funds held by company under reinsurance treaties" is not adjusted, because it is for reinsurance assumed. In the problem, the BS adjustments are for reinsurance ceded.