Conditions to receive reinsurance accounting treatment
for the requirement of "a significant loss to the reinsurer is reasonably possible" does this mean a loss event or an UW loss? Meaning if a massive loss event is reasonable possible to occur in the reinsurers layer, but they also have a massive amount of premium then is there still risk there?
Comments
UW loss. It is meant in the sense of gain/loss, i.e. reinsurer's loss exceeds its premium.
Is the risk transfer test application to both SAP and GAAP?
Yes, it is applicable to both SAP and GAAP. Once it is established that there is risk transfer, the reinsurance accounting treatment is subject to the separate rules of SAP and GAAP.