DISCLOSURES FOR REINSURANCE

Question 1

SECT E: DISCLOSURES FOR REINSURANCE

REINS DISCLOSURES – GEN FIN STMTS – REINS PROV (3)

Answer 1

1. UNSECURED AGG REINS RECOVERABLES W/ INDIV REINSURER > 3% PHS
   I. NAME OF REINSURER
   II. UNSECURED AGG REINS RECOV FOR PAID, UNPAID, IBNR, LAE, UEP
2. REINS RECOV IN DISPUTE – BY REASON OF NOTIFICATION, ARBITRATION OR LIGITATION
   I. PAID + CASE + IBNR IN DISPUTE > 5% PHS
   II. AGG OF ALL DISPUTED ITEMS > 10% PHS
3. UNCOLLECTIBLE REINS – DESCRIBE UNCOLL REINS WRITTEN OFF, INCL REINSURERS, IN FOLLOWING CLASSIFICATIONS: LOSSES INCURRED, LAE INCURRED, PREMS EARNED, OTHER

Question 2

SECT E: DISCLOSURES FOR REINSURANCE

REINS DISCLOSURES – GEN FIN STMTS – TYPES OF CONTRACTS (4)

Answer 2

1. ASBESTOS & POLLUTION CONTRACTS
   I. LIMITS & COLLATERAL
   II. AMT OF UNEXHAUSTED LIMIT AS OF REPORTING DATE
   III. DESCRIPTION OF SIGNIFICANT REINS TERMS
2. REINS AGREEMENTS ACCOUNTED FOR AS DEPOSITS
   I. DESCRIPTION OF REINS AGREEMENTS
   II. ANY OF THE AMTS INITIALLY RECOGNIZED FOR EXPECTED RECOVERIES
3. TRANSFER OF RUN-OFF AGREEMENTS – MUST BE APPROVED BY DOMICILLIARY REGULATOR
   I. DESCRIPTION OF AGREEMENT
   II. AMT OF CONSIDERATION PAID
   III. LIABS TRANSFERRED
4. RELEASE REINSURER FROM LIABILITY – SPECIFIC INTERROGATORY FOR THIS

Question 3

SECT E: DISCLOSURES FOR REINSURANCE

REINS DISCLOSURES – GEN FIN STMTS – FIN STRENGTH (2)

Answer 3

1. DOWNGRADE OF CERTIFIED REINSURER’S FIN STRENGTH OR REINSURER SUBJ TO REVOCATION
   I. NAME OF CERTIFIED REINSURER
   II. DATE & JURISDICTION OF ACTION
   III. COLLATERAL % REQS PRE- AND POST-ACTION
   IV. NET CEDED RECOV SUBJ TO COLLATERAL
   V. ESTIMATE OF IMPACT COLLATERAL DEFICIENCY
2. REPORTING ENTITY IS CERTIFIED REINSURER AND DOWNGRADED/SUBJ TO REVOCATION
   I. DATE & JURISDICTION OF ACTION
   II. COLLATERAL % REQS PRE- AND POST-ACTION
   III. NET CEDED RECOV SUBJ TO COLLATERAL

Question 4

SECT E: DISCLOSURES FOR REINSURANCE

REINS DISCLOSURES – NOTES TO THE FIN STMTS (3)

Answer 4

1. SPECIAL SURPLUS FROM RETROACTIVE REINS – TABLE OF ALL RETROACTIVE REINS AGREEMENTS FOR LOSSES THAT HAVE OCCURRED & WILL GENERATE SPECIAL SURPLUS TRANSACTIONS
2. COMMUTATION OF CEDED REINS – DESCRIPTION, INCL REINSURERS, IN FOLLOWING CLASSIFICATIONS: LOSSES INCURRED, LAE INCURRED, PREMS
3. REINS ASSMD & CEDED – COMPLETE TABLE WITH
   I. DISCLOSURE OF MAX AMT OF RETURN COMMISSION IF ALL CEDED REINS WERE TO BE CANCELLED
   II. DISCLOSURE OF ACCRUAL OF ADDL OR RETURN COMMISSION PREDICATED ON LOSS EXPER OR PROFIT SHARING AGREEMENTS

Question 5

SECT E: DISCLOSURES FOR REINSURANCE

REINS DISCLOSURES – SUPPLEMENT SCHEDS OF ANNUAL AUDIT (3)

Answer 5

1. QS CONTRACTS W/ PROVISIONS LIMITING REINSURER’S LOSS BELOW STATED QS % (DED, LR CORRIDOR ETC) – DISCLOSE NUMBER OF CONTRACTS & WHETHER THE AMT OF REINS CREDIT TAKEN REFLECTS THE REDUCTION IN QS COV
2. SAP VS GAAP – EXPLAIN WHY CONTRACTS ARE TREATED DIFFERENTLY FOR SAP/GAAP – PROSPECTIVE/RETROACTIVE REINS UNDER SAP AND DEPOSIT UNDER GAAP (AND VV)
3. CEDED RISK WHERE UW RESULTS, CY WP OR YE CEDED L&LAE VX > +/-5% PRIOR PHS (AND UNDER SCENARIOS A & B)
   I. SUMMARY OF TERMS, AND WHETHER A OR B APPLIES
   II. MGT’S PRINCIPAL OBJECTIVES IN TETNERING AGREEMENT, INCL ECONOMIC PURPOSE
   III. AGG FIN STMT IMPACT, GROSS OF ALL SUCH CONTRACTS ON BALANCE SHEET & INCOME STMT

Question 6

SECT E: DISCLOSURES FOR REINSURANCE

SUPPLEMENT SCHEDS OF ANNUAL AUDIT – CEDED RISK SCENARIOS (2)

Answer 6

1. SCENARIO A
   I. CONTRACT ACCOUNTED FOR AS REINS (AND NOT DEPOSIT)
   II. AT LEAST ONE FEATURE
   A. TERM ≥ 2 YRS
   B. LIMITED/CONDITIONAL CANCELLATION
   C. AGG STOP LOSS REINS COV
   D. UNILATERAL RIGHT BY EITHER PARTY TO COMMUTE REINS CONTRACT
   E. PMT SCHED THAT DELAYS TIMELY REIMBURSEMENT TO CEDANT
2. SCENARIO B
   A. WP ≥ REINSURER’S DIRECT WP + ASSMD WP
   B. WP RETROCEDED BACK TO REPORTING ENTITY ≥ 25% WP CEDED