reinsurance shell game - disclaimer: nerds only
have been perusing some financial statements to see our learning in action. got a peek at how the sausage gets made at when reviewing a certain company that uses gecko in their ads. they're ceding all their losses and premiums to the Advantage company, with no ceding commission, in a bid to suppress their surplus and the constraints that would place on their float. this is for 2023, and interestingly, this artificial inflation in DWP doesn't flow through to Sched T, so their loss ratio by state doesn't pop out. will be curious whether this is repeated in 2024
Comments
Interesting. I don't think this type of thing is uncommon however. It does come off as gaming the system but regulators would (should?) generally be aware of what's going on. As long as Advantage is itself healthy, it should be ok I believe.