reinsurance accounting 2015/sessions/arf/arf 3/iasa... · spis are bermuda domiciled insurance...

IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

Session 407 Written & Unwritten Rules of

Reinsurance Accounting Tuesday, June 9, 2015 11:00 am – 12:00 pm

The Written and Unwritten Accounting Rules of Reinsurance Accounting

Provide an overview of the written and unwritten rules for reporting reinsurance recoverables on Schedule F in 2015

Provide an overview of collateral reform at the national level as well as an update on the state adoption of collateral reform

Differences in the regulations among the states will be highlighted Introduce the more recent complications in reinsurance reporting and more

importantly how to address the reporting of these complications Provide a brief overview of the reporting of recoverables from collateralized

reinsurers


Agenda Tracker

Section 1 Introduction to Collateralized Reinsurance Section 2 Collateralized Reinsurance Reporting Section 3 Update on U.S. Collateral Reform Section 4 Certified Reinsurer Reporting

Traditional vs. Collateralized Reinsurer

Category Traditional Reinsurer Collateralized Reinsurer Financial Statements Available Typically not available Financial Strength Ratings Rated Not rated Collateral For existing liabilities only Typically for the full limits

of exposure Credit Risk Ceding insurer bears the

credit risk that traditional reinsurer will post collateral and pay claims

Credit risk is essentially eliminated

Regulation and Reporting High Low Sample Companies Arch Reinsurance Ltd.

Aspen Bermuda Ltd. Everest Reinsurance Co.

Aeolus Capital Mgmt. Ltd. Aspen Capital Markets Mt. Logan Re Ltd.

Collateralized Reinsurance Structure

Ceding Insurer

Trustee

Alternative Market / Collateralized Reinsurer

Third Party Investors

Trust Agreement

Trust

Reinsurance Agreement

Losses

Premium

Bermuda Collateralized Reinsurers

Class 3, 3A and 3B Entities May Be Used in Collateralized Re Transactions

Bermuda has a multi-license system of regulation which categorizes general insurance companies into six classes Class 1: A single-parent captive insurance company Class 2: Multi-owner captives

Class 3: Applies to companies not included in other classes Class 3A: Small commercial insurers Class 3B: Large commercial insurers

Class 4: Insurers and reinsurers underwriting direct excess

liability insurance and/or property catastrophe reinsurance risks

Bermuda Special Purpose Insurer (SPI)

SPIs are Bermuda domiciled insurance companies designed to assume reinsurance risks (often shorter term vehicles lasting 2-3 years)

There are two requirements that must be met to be licensed as a SPI • The business the SPI writes must be “fully-funded” • The parties to the transactions must be “sufficiently sophisticated”

Lightly regulated • Streamlined application process • Minimum capital is $1 • No investment restrictions • No requirement for loss reserve opinions • It is possible to waive the requirement to prepare audited financial

statements and instead file unaudited management accounts

Bermuda Segregated Accounts

Segregated Accounts Company (SAC) • Bermuda domiciled (usually a SPI or Class 3, 3A or 3B) that is permitted to

create separate segregated accounts and to write insurance / reinsurance

Segregated account • Collection of records detailing transactions related to each other • Not a separate legal entity • Assets and liabilities of each segregated account are intended to be

“walled off” or statutorily segregated from the assets and liabilities of other segregated accounts and the general account of the SAC

Alternative Market Risk Bearing Counterparties

Schedule of Segregated Account Entities Which Comprise the Subscribing Reinsurer

Name of Grantors

Percentage Interest in

Contract Aeolus Re Ltd. In respects of its

Underwriting Segregated Account 8.654%

Keystone Segregated Account 87.367%

Hotoru Re Segregated Account 1.764%

QVT V Segregated Account 1.008%

Pendulum Re II Ltd. (Special Purpose Insurer) 1.207%

Total 100.000%

Investor Risk - Return Options

Expected Loss

Loss

Fre

e Yi

eld

Fund III High

Return Investors

Fund II Mid-Tier Investors

Fund I Low Risk

Investors

Note: For Illustrative purposes only

Collateralized Reinsurance


Risk-Bearing Entities

Aeolus Capital Management Ltd. (Licensed Insurance Manager)

Pendulum Re II Ltd (Special Purpose

Insurer)

Typically no employees Risk-bearing counterparties Party to the Trust Agreement (“Grantors”) Typically very limited capital beyond the trusts


Aeolus Re Ltd. (Class 3 and Segregated

Account Company)

Keystone Segregated Account

Hotoru Segregated Account

Collateralized Reinsurance Structure with SPI

Trustee


Premium

Cash and Assets (at Inception)

Fees / Profits

Assets less Losses

(upon release)


Losses

Equity / Debt or other Financing Mechanism

Dividends

Trust Agreement

Trust

Ceding Insurer Special Purpose

Insurer (Risk-Bearing

Entity) Reinsurance Agreement

Underwriting Sevices

Agreement

Collateralized Reinsurance Structure with Segregated Account Company

Trustee


Premium Cash and Assets (at Inception)

Fees / Profits

Assets less Losses

(upon release)


Losses

Equity / Debt or other Financing Mechanism

Dividends

Trust Agreement

Trust

Ceding Insurer

Segregated Accounts Company

Reinsurance Agreement

Underwriting Sevices

Agreement

Segregated Account 1

Management Fees into the

General Account

Segregated Account 2


Agenda Tracker


Collateralized Reinsurance Reporting

The risk bearing entities of collateralized reinsurers may be classified as “unauthorized reinsurers”.

Premiums and recoverables due to/from the risk bearing entities of collateralized reinsurers should be reported on Schedule F, similar to other reinsurance counterparties • Part 3 – Ceded Reinsurance: If total premiums and/or recoverables are greater

than USD 100K and/or any of the paid recoverables are over 90 days past due (otherwise they may be aggregated and not appear individually)

• Part 4 – Aging of Ceded Reinsurance: If there are outstanding paid loss and paid LAE recoverables (i.e. if there is a balance appearing in columns 7 and/or 8 of Schedule F – Part 3)

• Part 5 – Provision for Unauthorized Reinsurers: If there are any outstanding recoverables due from the risk-bearing entity - The risk-bearing entity’s share of collateral should be reported in column 11 of Part 5 (Trust Funds and Other Allowed Offset Items) to avoid a provision for reinsurance

Segregated Account Reinsurance Reporting

Segregated accounts should be listed individually on Schedule F with their proportionate share of premiums, recoverables and collateral • Ceding insurers should include the name of the SAC as well as the name of the

segregated account in column 3 • Ceding insurers should continue to list the Alien ID number of the associated

SAC in column 1 of Schedule F - Parts 3, 4 and 5

2015 Statutory Annual Statement - Schedule F - Parts 3, 4 and 5 (Columns 1 - 3)

1

Federal ID Number

2

NAIC Company

Code

3

Name of Reinsurer AA-1111111 ……….. ABC Reinsurance Ltd - Prime Segregated Account AA-1111111 ……….. ABC Reinsurance Ltd - Prime II Segregated Account AA-1111111 ……….. ABC Reinsurance Ltd - Prime III Segregated Account


Agenda Tracker


Authorized vs. Unauthorized Reinsurers

Authorized Reinsurers • Reinsurers who are licensed to write reinsurance in a particular state • Reinsurers who are licensed in a state with “substantially similar” credit for

reinsurance regulation • Reinsurers who have met the requirements to become Accredited, Trusteed

or equivalent (the term varies by state) •Accepted, Approved, Qualified

• In most cases, authorized reinsurers do not have to post collateral in order for ceding company to get credit for the reinsurance

Unauthorized Reinsurers • Reinsurers not licensed or who have not met the requirements to be

Accredited, Trusteed or equivalent

Authorized vs. Unauthorized Reinsurers

Unauthorized reinsurers are required to post collateral • If the unauthorized reinsurer does not post collateral, a provision for

reinsurance (penalty) will be calculated which offsets the value of the reinsurance recoverable asset

Therefore, it is a standard practice in all U.S. reinsurance contracts that if the reinsurer is not authorized, they agree to provide collateral to the U.S. ceding insurer

Why is Collateral Required from Non-U.S. Reinsurers

Collateral ensures collectability of recoverables due from non-U.S. reinsurers • Without collateral insurers would have to litigate in the U.S. and then seek

to enforce the judgment abroad (which may or may not be honored) Collateral is only required for the reinsurer’s share of the liabilities of the

ceding insurer (not the full limits of exposure) • Paid losses and paid LAE • Case reserves • IBNR reserves (loss and LAE) • Unearned premiums and contingent commissions

Multi-Beneficiary Trusts (MBTs)

The use of MBTs requires state approval Reinsurers must apply and be approved in each state where they plan to use the

MBT In order to get the MBT approved, reinsurers must agree to several

requirements, including • Increased reporting • Agreement to collateralize 100% of recoverables due to ceding insurers in the

state Meeting all these criteria results in the MBT being approved and reinsurer being

granted authorized status (“Trusteed” or “Accredited” status or equivalent) • Recoverables should be reported as authorized

Multi-Beneficiary Trusts (MBTs)

Upon Commissioner approval in each state, MBTs can be used to collateralize balances from reinsurance contracts that incept on or after the date of accreditation

Reinsurers may also be able to “roll-in” balances from contracts that incepted prior to the date of MBT approval • No additional regulatory approvals are required for the roll-in • Typically, once the existing recoverables are “rolled-in”, the reinsurer will notify

any impacted ceding companies that LOCs are no longer needed and can be released

If the existing recoverables are rolled in to the MBT, it changes the reporting treatment of the recoverables • All balances in the MBT are reported as authorized

MBT Permitted Assets

Trust maintenance • Updated on a quarterly basis

Permitted assets (Same as a 114 single beneficiary trust) • Cash • Money market funds • Government securities • Municipals • Investment grade securities • Equities, not more than 10% of the total trust value • Letters of credit, not more than 20% of the total trust value

In the event of insolvency of the reinsurer, the U.S. regulator of the trust is entitled to take possession of the trust for the benefit of U.S. ceding insurers

Advantages and Disadvantages of Multi-Beneficiary Trusts (MBTs)

Collateral Feature LOCs, SBTs MBTs Collateral Procurement + Collateral Buffer + Who Sets the Amount of Collateral + Commingling of Assets + Access to the Assets +

Ceding Insurer Perspective

Reinsurers Using Multi-Beneficiary Trusts (MBTs)

Aspen Bermuda Limited Aspen Insurance UK Limited AXIS Specialty Limited DaVinci Re Hannover Re (Germany) Lancashire Lloyd’s Mapfre Re Montpelier Partner Re Renaissance Re

NAIC Credit for Reinsurance Model Law and Regulation is finalized (4th Quarter, 2011)

– Establishes new standards for collateral requirements

Collateral Reform Milestones

Individual States Adopt Collateral Reform (2008 – 2015) – 16 States have approved reinsurers for reduced collateral – Additionally 12 States and D.C. have enacted the reduced collateral law

Credit for Reinsurance Model Law (1984) – Provides credit for ceded reinsurance if the reinsurer is licensed, accredited or provides sufficient collateral

NAIC & State Regulators Support Credit for Reinsurance Initiatives (2013 - 2015)

– Assists states in qualifying jurisdictions – Assists states in reviewing reinsurers for certification

Active (State has Certified reinsurers) State has adopted Model Law (#785)

State Adoption of Collateral Reform

Adopted 785 & 786 Colorado Indiana Ohio Rhode Island

Active Alabama California Connecticut Delaware Florida Georgia Iowa Louisiana Maine Maryland Missouri New Hampshire New Jersey New York Pennsylvania Virginia

State has adopted Law (#785) & Reg. (#786) Law (#785) & Reg. (#786) under consideration

Adopted 785 Arizona Arkansas District of Columbia Hawaii Massachusetts Nebraska North Dakota New Mexico Vermont

Set by each state’s Insurance Commissioner Model Regulation specifies a minimum of USD 250M

Certified Reinsurer Criteria

NAIC will publish a list of Qualified Jurisdictions Criteria to be considered includes regulatory system,

reciprocity & information sharing

Minimum Specified Amount of Capital and Surplus

Maintain a Secure Rating from 2 Rating Agencies

Must be based on an interactive rating – No public information (pi) ratings

Model Regulation lists the following 4 rating Agencies:

– A.M. Best, Fitch, Moody’s and S&P

Domiciled in a “Qualified Jurisdiction”

Certified Reinsurer Requirements

Must apply and be approved in each state The reinsurer’s status in the ceding insurer’s state of domicile governs the amount of collateral required (It does not matter where the loss occurs) If approved for reduced collateral, reinsurer becomes known as a “certified reinsurer”

Application & Certification

Eligible Contracts

Only contracts that incept on or after the certification date are eligible for reduced collateral

Reinsurers must collateralize gross liabilities

Certified reinsurers must submit audited financial statements and report on assumed and ceded reinsurance balances (similar to Schedule F) and keep Commissioners informed of significant changes in ratings, licensing etc.

Certified Reinsurer Reporting

Certified Reinsurers: Ratings Scale

Ratings Collateral % A.M. Best Fitch/S&P Moody’s Secure-1 0% A++ AAA Aaa Secure-2 10% A+ AA+, AA, AA- Aa1, Aa2, Aa3

Secure-3 20% A A+, A, A1, A2

Secure-4 50% A- A- A3

Secure-5 75% B++, B+ BBB+, BBB, BBB-

Baa1, Baa2, Baa3

Vulnerable-6 100% Ratings B and below

Ratings BB+ and below

Ratings Ba1 and below

Rating Upgrades and Downgrades

Certified reinsurer rating upgrades apply only on a prospective basis Certified reinsurer rating downgrades (and revocations) apply retroactively

– However, there is a three-month grace period for obtaining additional collateral

– Therefore, when the reporting date falls within the three month grace period, the ceding insurer may report collateral required based on the certified reinsurer’s rating prior to the downgrade or revocation

Collateral Deferral for Catastrophe Losses

Certified reinsurers are not required to post collateral for recoverables that originated form a recognized catastrophe loss – The insurance department of each state determines whether any

catastrophe loss is eligible for the collateral deferral – The deferral applies to reinsurers at all certified rating levels – The deferral lasts up to one-year after the ceding insurer posts its initial

reserve for the loss

Florida Update

Florida, which was the first to pass the law and regulation and still has significant differences from the Model Law and Regulation

Below are changes that are being contemplated in FL (so they are more aligned with the Model Law and Regulation

They expect to move forward with the changes in June 2015*

Key Differences - Florida Original Proposed Name for Reduced Collateral Reinsurers Eligible Certified

Amount of Collateral for “A-” Rated Reinsurers 20% 50%

Eligible Lines of Business Property Catastrophe All Lines

Collateral Deferral Applies Only to Named Hurricanes

Named Hurricanes

Acceptable Rating Agencies Includes Demotech

Includes Demotech

*Note: The Florida Office of Insurance Regulation put out the proposed changes for public comment. They received 3 responses. They will move forward with the proposed changes in June, unless the responses cause them to reconsider.

Florida Certified Reinsurers

Eligible ReinsurerUses MBT?

Date of Certification Rating

Collateral Required Eligible Lines1

ACE Tempest Reinsurance Ltd No 10/06/10 Secure-3 20% Property Cat. Reins.

Allied World Assurance Company Ltd No 03/01/11 Secure-3 20% Property Cat. Reins.

Arch Reinsurance Ltd No 03/31/11 Secure-3 20% Property Cat. Reins.

Aspen Bermuda Ltd Yes 05/06/11 Secure-3 20% Property Cat. Reins.

AXIS Specialty Ltd Yes 05/23/11 Secure-3 20% Property Cat. Reins.

DaVinci Reinsurance Ltd Yes 06/09/11 Secure-3 20% Property Cat. Reins.

Endurance Specialty Insurance, Ltd No 05/31/12 Secure-3 20% Property Cat. Reins.

Hannover Re (Bermuda) Ltd No 09/21/10 Secure-3 20% Property Cat. Reins.

Hannover Rueck SE Yes 01/01/10 Secure-3 20% Property / Casualty

Hiscox Insurance Company (Bermuda) Ltd No 11/04/10 Secure-3 20% Property Cat. Reins.

Markel Bermuda Ltd (fka Alterra Bermuda Ltd) No 03/23/11 Secure-3 20% Property Cat. Reins.

Montpelier Reinsurance Ltd Yes 03/17/11 Secure-3 20% Property Cat. Reins.

MS Frontier Reinsurance Ltd No 06/13/13 Secure-3 20% Property Cat. Reins.

Partner Reinsurance Company Ltd Yes 11/04/10 Secure-3 20% Property Cat. Reins.

Platinum Underwriters Bermuda Ltd No 12/13/11 Secure-3 20% Property Cat. Reins.

Renaissance Reinsurance Ltd Yes 12/29/10 Secure-3 20% Property Cat. Reins.

Tokio Millennium Re Ltd2 No 02/25/11 Secure-3 20% Property Cat. Reins.

Underwriters at Lloyd’s, London Yes 10/06/11 Secure-3 20% Property Cat. Reins.

Validus Reinsurance Ltd. No 08/10/12 Secure-3 20% Property Cat. Reins.

XL Re Ltd No 06/17/10 Secure-3 20% Property / Casualty

Florida Certified Reporting Guidance

Eligible ReinsurerDate of

CertificationDate

TrusteedMBT Roll-

in? Lines of Business PeriodReport Recoverables

Aspen Bermuda Ltd 05/06/11 06/06/12 Yes All Lines Prior to Certification Authorized

Property Cat Reins Post Certification Authorized1

All Other Lines Post Certification AuthorizedHannover Rueck SE 01/01/10 10/16/00 No All Lines Prior to Trusteed Unauthorized

All Lines Post Trusteed & Pre Cert Authorized

Property / Casualty Post Trusteed & Post Cert Certified2

All Other Lines Post Trusteed & Post Cert Authorized

03/17/11 03/17/11 Yes All Lines Prior to Cert. & Trusteed Authorized

Property Cat Reins Post Cert & Trusteed Certified

All Other Lines Post Cert & Trusteed Authorized

11/04/10 11/04/10 Yes All Lines Prior to Cert & Trusteed Authorized

Property Cat Reins Post Cert & Trusteed Authorized3

All Other Lines Post Cert & Trusteed Authorized

12/29/10 06/29/11 Yes All Lines Prior to Certification Authorized

Property Cat Reins Post Certification Certified

All Other Lines Post Certification Authorized

10/06/11 08/01/95 Yes All Lines Prior to Certification AuthorizedProperty Cat Reins Post Certification Authorized4

All Other Lines Post Certification AuthorizedXL Re Ltd 06/17/10 N/A N/A All Lines Prior to Certification Unauthorized

Property / Casualty Post Certification Certified2

All Other Lines Post Certification Unauthorized

(fka Aspen Insurance Ltd)

Underwriters at Lloyd’s, London

Montpelier Reinsurance Ltd

Partner Reinsurance Company Ltd

Renaissance Reinsurance Ltd

New York Certified Reporting Guidance

Certified ReinsurerDate Of

CertificationDate

AccreditedMBT

Roll-in?Lines of Business Period

Report Recoverables

01/01/11 12/21/95 No All Lines Prior to Trusteed Unauthorized

All Lines Post Trusteed & Pre Cert Authorized

Certified Lines Post Trusteed & Post Cert Certified

All Other Lines Post Trusteed & Post Cert Authorized


Certified Lines Post Certification Certified



Certified Lines Post Certification Authorized


07/01/11 N/A No All Lines Prior to Certification Unauthorized




Certified Lines Post Certification Authorized


Varies N/A N/A All Lines Prior to Certification Unauthorized



Hannover Rueck SE

Partner Reinsurance Company Ltd

Tokio Millennium Re AG(Excludes business written out of US branch)

All Other New York Certified Reinsurers

Montpelier Reinsurance Ltd

Underwriters at Lloyd’s, London

Certified Reinsurers: Sample Provision (Part 6 - Section 1)

ABC Reinsurer is required to provide 20% collateral Ceding Insurer is due 1,000 from ABC Reinsurance

If no collateral is provided, what is the provision for reinsurance?

a) 200 (as only 200 is needed to meet full collateral requirements) b) 1,000 (as no collateral has been provided)

In the same scenario, if ABC Reinsurer provided collateral of 150, what would

be the provision for reinsurer a) 50 (as only 200 is needed to meet full collateral requirements) b) 250 (as 75% of required collateral has been provided)

Multi-Beneficiary Trusts for Certified Reinsurers

Certified reinsurers may also use MBTs to collateralize their reduced collateral obligations

However, the assets for the reduced collateral obligations must be in a separate MBT than the assets for the full (100%) collateral obligations

The only difference between the full (100%) collateral MBT and the reduced collateral MBT is that the buffer layer in the reduced collateral MBT is only 10M

If a certified reinsurer uses a full collateral MBT to collateralize recoverables eligible for reduced collateral, the balances should reported as authorized

Reporting Complications - Unwritten Rules

Reporting Issue Impact on Schedule F Changing Classification of Reinsurer

Reinsurers may have balances reported in multiple sections of Schedule F under different classifications

Eligible Lines of Business Not all lines may be certified, so the recoverables may need to be reported under different classifications

Tracking Recognized Cats Recoverables from Recognized Cats may need to be tracked and reported separately

Collateral Bifurcation Collateral may need to be bifurcated to follow the recoverables

Rating Upgrades Recoverables subject to different collateral requirements must be reported on separate lines

Rating Downgrades May need to be reported at collateral percentage prior to the rating downgrade

MBT Roll-ins Changes the reporting to Authorized

Full Collateral MBTs for Certified Recoverables

Changes the reporting to Authorized

Schedule F: Reinsurance (2011)

Part 1: Assumed Reinsurance Part 2: Portfolio Reinsurance Part 3: Ceded Reinsurance Part 4: Aging of Ceded Reinsurance Part 5: Provision for Unauthorized Reinsurance Part 6: Provision for Overdue Authorized Reinsurance (Non-Slow Payers - Authorized reinsurers with less than 20% overdue) Part 7: Provision for Overdue Reinsurance (Slow Payers – Authorized reinsurers with 20% or more overdue) Part 8: Restatement of Balance Sheet to Identify the Net Credit for

Reinsurance

Schedule F: Reinsurance (2012 & Subsequent)

Part 1: Assumed Reinsurance Part 2: Portfolio Reinsurance Part 3: Ceded Reinsurance Part 4: Aging of Ceded Reinsurance Part 5: Provision for Unauthorized Reinsurance Part 6: Provision for Reinsurance Ceded to Certified Reinsurers

• Section 1 for Uncollateralized Recoverables • Section 2 for Overdue Recoverables (mimics Parts 7 & 8)

Part 7: Provision for Overdue Authorized Reinsurance (Non-Slow Payers) Part 8: Provision for Overdue Reinsurance (Slow Payers) Part 9: Restatement of Balance Sheet to Identify the Net Credit for Reinsurance

Schedule F: Provision for Reinsurance

The provision for reinsurance is calculated on Parts 5 – 8 of Schedule F

There are three scenarios which may require a provision for reinsurance • Recoverables in dispute • Overdue recoverables • Uncollateralized recoverables

The size of the provision for each type of reinsurer reflects the regulator’s view of the potential credit risk • Unauthorized reinsurers may have the highest provision • Slow paying authorized or certified reinsurers may have a higher

provision than non-slow paying authorized or certified reinsurers

Schedule F: Parts 3 - 8

Size of the Provision

Classification

Under Collateralized

(a) Overdue

(b) Disputed

(c) Total

Provision Unauthorized 100% 20% 20% a + b + c Authorized (Non-Slow Payer) 20% 20% b + c

Authorized (Slow Payer) 20% 20% 20% Greater of a

or b+c

Certified – Section 1 Amount Provided / Amount Required a

Certified – Section 2 (Non-Slow Payer) 20% 20% b + c

Certified – Section 2 (Slow Payer) 20% 20% 20% Greater of a

or b+c

Schedule F: Part 6 – Section 1

SCHEDULE F - PART 6 - SECTION 1Provision for Reinsurance Ceded to Certified Reinsurers as of December 31, Current year (000, OMITTED)

Reinsurer Info Collateral Required Collateral Provided Provision Calculation

1 2 3 4 5 6 7 8 9 10 11

ID Number

NAIC Company

CodeName of Reinsurer

Domiciliary Jurisdiction

Certified Reinsurer

Rating (1 through 6)

Effective Date of Certified

Reinsurer Rating

Percent Collateral

Required for Full Credit

(0% - 100%)

Net Amount Recoverable

from Reinsurers

(Sch. F Part 3 Col. 18)

Catastrophe Recoverables Qualifying for

Collateral Deferral

Net Recoverables

Subject to Collateral

Requirements for Full Credit

(Col. 8 - Col. 9)

Dollar Amount of Collateral Required (Col. 10 x

Col. 7)ABC Reins. Bermuda 3 01/01/12 20% 1,200 200 1,000 200XYZ Re Bermuda 4 07/01/12 50% 3,000 0 3,000 1500

18 19 20 2112 13 14 15 16 17

Multiple Beneficiary

Trust

Funds Held by Company

Under Reinsurance

Treaties

Letters of

Credit

Issuing or Confirming

Bank Reference Number (a)

Other Allowable Collateral

Total Collateral Provided (Col. 12+ 13+ 14+

16)0 0 150 001 0 150 15% 75% 950 250

1500 0 0 001 0 1500 50% 100% 3,000 0

Collateral Provided

Percent of Collateral

Provided for Net

Recoverables Subject to Collateral

Requirements (Col. 17 / Col. 10)

Percent Credit Allowed on

Net Recoverables

Subject to Collateral

Requirements (Col. 18/Col.

7, not to exceed 100%)

Amount of Credit

Allowed for Net

Recoverables (Col. 9 + (Col. 10 x Col. 19))

Provision for Reinsurance

with Certified

Reinsurers Due to

Collateral Deficiency (Col. 8 - Col. 20)

Schedule F: Part 6 – Section 2

SCHEDULE F - PART 6 - SECTION 2Provision for Overdue Reinsurance Ceded to Certified Reinsurers as of December 31, Current Year (000 OMITTED)

Note: If column 8 is less than 20%, enter zero in columns 12 and 13.

Slow Payers - GREATER OF + 20% of Uncollateralized Rec. OR + 20% of Rec. > 90 Days overdue + 20% of Disputed Recoverables

Non-Slow Payers + 20% of Rec. > 90 Days overdue + 20% of Disputed Recoverables

1 2 3 4 5 6 7 8 9

ID Number

NAIC Company

CodeName of

ReinsurerDomiciliary Jurisdiction

Reinsurance Recoverable on Paid Loss

and LAE More Than 90 Days

Overdue (a)

Total Reinsurance

Recoverable on Paid Losses and LAE (b)

Amounts Received Prior 90 Days

Percent More Than 90 Days Overdue

20% of Amounts in

Col.5ABC Reins. Bermuda 300 500 100 50% 60XYZ Re Bermuda 75 400 50 17% 15

10 11 1512 13 14

20% of Amounts in

Dispute Excluded from

Col.5

Amount of Credit Allowed for Net Recoverables (Sch. F Part 6

Section 1 Col. 20)

Total Collateral Provided

(Sch F. Part 6 Section 1,

Col. 17) not to exceed Col 11

Net Unsecured Recoverable for which Credit is

Allowed (Col. 11 - Col. 12)

20% of Col. 13

Provision for Overdue

Reinsurance Ceded to Certified

Reinsurers (Greater of Col. 9 + Col 10 or Col.

14) Not to exceed Col. 11

0 950 150 800 160 1600 3,000 0 0 0 15

Complete if Column 8 is 20% or Greater


THANK YOU FOR YOUR ATTENTION

Please Complete the Session Evaluation Form on the Conference App

or Paper Forms

Contacts

Mike McClane Aon Benfield Market Analysis, Americas +1.215.751.1596 [email protected]


Legal Disclaimer

© Aon Benfield Inc. 2015. This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. This analysis is based upon information from sources we consider to be reliable, however Aon Benfield does not warrant the accuracy of the data or calculations herein. The content of this document is made available on an “as is” basis, without warranty of any kind. Aon Benfield disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Members of the Aon Benfield Analytics will be pleased to consult on any specific situations and to provide further information regarding the matters discussed herein.

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