Liability Based Structuring/Retroactive Reinsurance/income statem

Lawn,Yin ( (no email) )
Wed, 21 Apr 1999 12:20:53 -0500

This message is in MIME format. Since your mail reader does not understand
this format, some or all of this message may not be legible.

------_=_NextPart_001_01BE8C1B.8495E818
Content-Type: text/plain

Hi all,
Had a flashback from part 8 while reading NAIC chapter 22. I thought I post
a question. Not sure whether this is exam related or not. If not, I
apologize.

Many companies that went through a liability based restructuring had
reinsurance arrangement on their existing environmental liabilities.

According to NAIC chapter 22, any recoverable from reinsurer has to be
booked on gross basis for a retroactive reinsurance. The recoverable is
recognized in the write-in on page 4 while the gross losses flow through the
income statement. Hummm... Does that mean that the reinsurance arrangements
for a company after LBR will have no benefit to its Statutory income? In
other words, the company's statutory income will still recognize the adverse
loss development to its environmental liability on a gross basis but will
not recognize the reinsurance recoverable from those adverse development.
Is that true? Wouldn't that distort the actual income and even the IRIS
ratios?

Am I thinking this correctly?

---Yin

------_=_NextPart_001_01BE8C1B.8495E818
Content-Type: text/html
Content-Transfer-Encoding: quoted-printable

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2//EN">
Liability Based Structuring/Retroactive Reinsurance/income =statement

Hi all,
Had a flashback from part 8 =while reading NAIC chapter 22.  I thought I post a question.  =Not sure whether this is exam related or not.  If not, I =apologize.

Many companies that went =through a liability based restructuring had reinsurance arrangement on =their existing environmental liabilities.

According to NAIC chapter =22,  any recoverable from reinsurer has to be booked on gross =basis for a retroactive reinsurance.  The recoverable is =recognized in the write-in on page 4 while the gross losses flow =through the income statement.  Hummm... Does that mean that the =reinsurance arrangements for a company after LBR will have no benefit =to its Statutory income?  In other words, the company's statutory =income will still recognize the adverse loss development to its =environmental liability on a gross basis but will not recognize the =reinsurance recoverable from those adverse development.  Is that =true?  Wouldn't that distort the actual income and even the IRIS =ratios? 

Am I thinking this =correctly?

---Yin

------_=_NextPart_001_01BE8C1B.8495E818--