Prospective vs retrospective

AliceAlice
in NAIC.SSAP-62R

For spring 2019 b.ii

Should we answer it based on prospective vs retrospective. Like following:

For retrospective reinsurance, recoverable on reserve is recorded as a negative write in liability.
For prospective reinsurance, recoverable on reserve in net of reinsurance (Also liability).

Thanks

Comments

  • grahamgraham

    Hi @Alice,

    I assume you're referring to Q17 on the 2019.Spring exam. Also I think you meant to say retroactive reinsurance (rather than retrospective reinsurance). What you wrote above is correct for SAP accounting treatment but you didn't mention GAAP accounting. Here's how I would have answered the question:

    prospective reinsurance

    • SAP: liabilities are shown NET of reinsurance
    • GAAP: liabilities are shown GROSS of reinsurance (offset by a ceded reinsurance asset)

    retroactive reinsurance:

    • SAP: record ceded reserves as negative write-in liability (contra-liability)
    • GAAP: record ceded reserves as reinsurance asset
  • AliceAlice

    Yes, I mean and Q17 and "retroactive".

    Okay! Thank you very much for the help.

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