Accounting and Reserving for Reinsurance Contracts

Many reinsurance contracts have adjustable premium and loss limiting features that complicate the reserving practice. This session addresses such factors as swing rating, loss-ratio caps, profit commissions, aggregate deductibles, and pre-set commutation terms. These, as well as other special provisions, have been put under closer scrutiny by Financial Accounting Standard 113 as well as EITF93-6 “Accounting for Multiple Year Retrospectively Rated Contracts by Ceding and Assuming Enterprises.” The panelists will discuss the reserving implications in FAS 113 as well as discuss more general GAAP vs. statutory accounting requirements for reserves. Emerging issues at the NAIC and FASB will make this a timely and important session.