Contents of Practice Note The remainder of this document contains the following sections: • • • • • • •
Key excerpts from statutory and GAAP reinsurance accounting standards; Documentation files for ceded reinsurance transactions; Considerations when evaluating whether risk transfer is self-evident; A summary of issues to be considered when performing cash flow testing; Appendix 1: Frequently asked questions and answers that may be helpful to the practicing actuary; Appendix 2: Sample checklists some companies use for documenting the process of identifying reasonably self-evident contracts; and Appendix 3: A copy of the Reinsurance Attestation Supplement.
In several places within the Practice Note, we refer to a report issued by the American Academy of Actuaries (Academy) in August 2005 titled “Risk Transfer in P&C Reinsurance: Report to the Casualty Actuarial Task Force of the National Association of Insurance Commissioners” (the Academy risk transfer report). The report can be downloaded from the Academy website at the following addresses: Casualty Web Page: http://www.actuary.org/naic/casual.asp Full Report: http://www.actuary.org/pdf/casualty/risk_transfer.pdf Report minus appendices: http://www.actuary.org/pdf/casualty/risk_transfer_abbrev.pdf COPLFR appreciates the comments it has received since the issuance of the Risk Transfer Testing Practice Note in November 2005, and has incorporated many of them in this update. COPLFR would also welcome any suggested improvements for future updates of this practice note. Suggestions may be sent to Lauren Pachman, Staff Liaison to the Committee on Property and Liability Financial Reporting, with the American Academy of Actuaries.
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