Reinsurance payable
Why would the reinsured have reinsurance payable on paid loss & LAE to the reinsurer?
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Why would the reinsured have reinsurance payable on paid loss & LAE to the reinsurer?
Comments
A company may be both a reinsured and a reinsurer.
So on company A's balance sheet,
"amounts recoverable from reinsurer" is the amount due to company A from reinsurer B on paid Loss and LAE
"reinsurance payable" is the amount due to insurer C from company A (assuming reinsurer) on paid Loss and LAE
Is this interpretation correct?
Also, does the same concept applies to below?
"funds held by or deposited w reinsured companies" is the collateral from company A (assuming reinsurer) held by insurer C. This is an asset to company A.
"funds held by company under reinsurance treaties" is the collateral from reinsurer B held by company A. This is a liability to company A.
1. Amounts recoverable from reinsurer:
This is typically an asset on the balance sheet of Company A. It represents the amounts that Company A expects to recover from its reinsurer (Reinsurer B ) for claims that Company A has already paid. Essentially, it's the reimbursement Company A is expecting based on its reinsurance arrangement.
2. Reinsurance payable:
If this is on Company A's balance sheet, and Company A is assuming the role of a reinsurer, then this would represent the amount that Company A owes to another company (Insurer C) for its share of the claims. This would be a liability for Company A.
3. Funds held by or deposited with reinsured companies:
This represents the funds or collateral that Company A (assuming the role of a reinsurer) has deposited with or is held by another company (Insurer C). It's an asset for Company A because it can expect these funds to be returned under certain conditions, often when the reinsurance contract terminates or when certain conditions of the reinsurance contract are met.
4. Funds held by company under reinsurance treaties:
This is the opposite of the above. It represents the funds or collateral that another company (Reinsurer B ) has deposited with Company A. It's a liability for Company A because it has an obligation to return these funds under the conditions specified in the reinsurance treaty.
Your understanding is on point, and yes, the concepts you've described generally apply as stated. However, always remember to check the specifics of each reinsurance agreement, as terms and conditions can vary.