Total Paid and Unpaid Net of Sal/Sub

dallinbiorndallinbiorn
edited March 8 in Odomirok.15-P

The wiki article mentions this when summarizing Schedule P Part 1, "Side note: If salvage/subrogation is shown in Part 1 then the total paid and total unpaid amounts are net of salvage/subrogation."

This is only true for GAAP accounting, right? Columns 11 and 24 in Schedule P Part 1 don't subtract out sal/sub, so I was a little confused what this note is referencing. Thanks!

Comments

  • Staff - ACStaff - AC

    S&S is not one of the items subtracted to get 11 and 24. S&S is already excluded from the columns making up 11 and 24. So, the S&S columns are like "memo items."

  • michael7michael7

    I am having trouble understanding the SAP vs GAAP differences for anticipated salvage and subrogation. Is SAP and therefore Schedule P gross of anticipated S&S but net of received S&S while GAP is net of both anticipated and received S&S? Thank you.

  • Staff - ACStaff - AC

    Both SAP and GAAP are net of S&S, received and anticipated. In P, there are two columns that show the amount of S&S that was netted.

  • michael7michael7

    Thank you for the response, then why is Anticipated Salvage and Subrogation listed as one of the 11 differences between SAP and GAAP?

    The wiki article also states:
    anticipated salvage & subrogation: (this difference is less familiar)
    - we ignored salv/sub in our SAP calculation of liabilities
    - salv/sub must be netted out of reserves in GAAP

    Any clarification would be helpful! Thank you.

  • grahamgraham

    We're checking into this.

  • Staff - ACStaff - AC

    Here are two relevant excerpts from Odomirok:

    1

    ANTICIPATED SALVAGE AND SUBROGATION
    In Schedule P reserves can be stated either gross or net of anticipated salvage and
    subrogation. If the reserves are stated net, column 23 in Schedule P discloses the amount of anticipated salvage and subrogation. This election appears to be a residual effect of precodification standards where certain states required reserves to be stated gross of anticipated salvage and subrogation.

    Under U.S. GAAP, estimated realizable salvage and subrogation is subtracted from the unpaid loss estimates.

    2

    In Schedule P – Part 1, unpaid loss reserves may be reported gross or net of anticipated salvage and subrogation. If the company elects the net basis, column 23 discloses the S&S amount so you can add it back to get gross. Paid losses are already net of actual S&S. Under U.S. GAAP, unpaid losses are always presented net of S&S.

    So, in SAP, reporting company has the option to state reserves gross of S&S, which makes for the difference.

    I overlooked this in my earlier answer, apologies.

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