Reinsurance treatment under GAAP and SAP

Lawn,Yin ( (no email) )
Mon, 19 Oct 1998 09:36:00 -0500

Hi I have a question regarding the treatment of reinsurance agreement
under GAAP and SAP:

Can someone explain to me the differences in the treatment of a
prospective reinsurance agreement between GAAP and SAAP? For example,
if company A has agreed to cede 100% of its future WC business in a
particular state to company B, will the impact to company A's result
under GAAP be different from SAP? How will the treatment of loss
reserves, ceding commission, earned premium and other expenses be
treated differently between the two principles? Maybe my question is
not well worded, but any explanation that can help me understand how
GAAP would treat reinsurance transaction differently from SAP would be
greatly appreciated. Thank you.

----Yin

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