NAIC Public Hearing To Review Transfer of Property and Casualty Reinsurance Agreements in Run-Off
Sep 10, 2009
The Property and Casualty Reinsurance Study Group of the National Association of Insurance Commissioners Financial Condition Committee has scheduled a public hearing on the transfer of property and casualty reinsurance agreements in run-off. Review of the issue is part of an overall Statutory Accounting Principles Working Group September 14 public hearing agenda prior to the NAIC 2009 Fall National Meeting that begins on September 21.
Although speakers have been pre-registered, the hearing will solicit feedback about standards proposed in NAIC Issue Paper No. 137, which amends Statement of Statutory Accounting Principle No. 62 (“SSAP No. 62”) by expanding the exceptions to retroactive accounting treatment to include property and casualty reinsurance run-off agreements that meet specified criteria. Reinsurance and retrocession agreements that meet insurance risk transfer requirements, as well as meet the specified criteria, would receive prospective accounting treatment.
Currently, unless specified exceptions are met, SSAP No. 62 provides for retroactive accounting treatment for property and casualty reinsurance agreements that transfer insurance risk, but cover liabilities that occurred prior to the effective date of the agreement.
SSAP No. 62 also currently allows four specified exceptions to retroactive reinsurance accounting, including:
- Structured settlements;
- Novations;
- Termination of reinsurance, or reduction in participation thereof;
- Treaties entered into during the ordinary course of business; or
- Intercompany reinsurance agreements, provided there is no gain in surplus as a result of the transaction.
On September 15, the Property and Casualty Reinsurance Study Group will review testimony from the previous day’s hearing as part of its regularly scheduled meeting. An update on contract certainty also will be given. The agenda for the September 15 meeting is attached. (A draft of Issue Paper No. 137 “Transfer of Property and Casualty Reinsurance Agreements in Run-off” begins on Page Five).
To view the Statutory Accounting Principles Working Group September 14 public hearing agenda, click here. (The above issue is outlined on Page Seven of the agenda).
Should you have any questions or comments, please contact Colodny Fass.
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