financial strength information of reinsurers
The study sheet mentions a point:
provides financial strength information of reinsureds & reinsurers.
But i don't see any financial strength information provided in the schedule F attached in Odomirok.
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The study sheet mentions a point:
provides financial strength information of reinsureds & reinsurers.
But i don't see any financial strength information provided in the schedule F attached in Odomirok.
Comments
We'll edit the cheat sheet to make that clearer. Thanks.
The cheat sheet has been edited so you can download it again to get the latest version.
I note that the new study sheet updated as "Provides insight into financial strength of reinsureds & reinsurers" . What are those "insights"?
The insights include:
Understanding of Assumed Reinsurance: Knowledge of the source and amount of assumed reinsurance provides valuable information for actuaries in assessing the reasonableness of loss and LAE reserve balances. This understanding helps actuaries determine the adequacy of the reserves held for future claims payments.
Collectability of Reinsurance: The focus on the collectability of reinsurance, particularly by regulators, underlines the importance of ensuring that reinsurance recoverables are likely to be collected. This involves evaluating the financial stability and rating of reinsurers and examining regulatory actions or overdue recoverables.
Detailed Information on Reinsurers: Schedule F provides detailed listings of reinsurance balances by reinsurer, allowing for an assessment of credit risk associated with each reinsurer. This is instrumental in understanding the likelihood of collection from each reinsurer.
Aging of Ceded Reinsurance: The provision of aging information for ceded reinsurance recoverables offers insights into potential collectability issues based on the payment history of reinsurers. This can signal the financial health and reliability of reinsurers.
Provision for Reinsurance: The derivation of the provision for reinsurance, which reflects a conservative estimate of uncollectible reinsurance, highlights the prudence in statutory accounting. This reserve for uncollectible reinsurance adds an additional layer of financial security.
Credit Risk Charge for Reinsurance Recoverables: Information on the credit risk charge for reinsurance recoverables required by the NAIC Risk-Based Capital (RBC) formula adds another dimension to the evaluation of reinsurance arrangements. This aspect reflects the regulatory oversight aimed at ensuring the overall solvency and financial strength of insurance companies.
Restatement of the Balance Sheet: The ability to view the reporting entity’s balance sheet on a gross of reinsurance basis via Schedule F, Part 6, provides insights into the extent of protection afforded by reinsurance arrangements. This perspective helps in understanding the underlying financial stability of the insurance company without the mitigating effects of reinsurance.