2004 #63 - Ceded UNEP counted as total recoverable (sched F)

[captn]

In calculating total recoverables for schedule F it seems that we include the amount of Ceded Unearned Premium Reserves.

I can't figure out why this makes sense.

You expect to get recoverables due to losses from your reinsurer - but why in zeus' anus would u expect to get your ceded UNEP back?

Wasn't the UNEP given to the reinsurer as compensation for covering a portion of the losses??? So the way i'm reading it right now is like this,

"hey, cover me. Hey, and give me back what i'm paying you to cover me"

[sticks1839]

It's definitely column 13 of Part 3, so it should be included. The only thing that sorta makes sense to me is that if the contract was broken somehow, you would be owed the UEPR back from the reinsurer.

It's more like:

"hey cover me and here's the money. and hey you haven't 'earned' all of this just yet so you still could owe it back."

[gosuruss]

Originally Posted by captn

In calculating total recoverables for schedule F it seems that we include the amount of Ceded Unearned Premium Reserves.

I can't figure out why this makes sense.

You expect to get recoverables due to losses from your reinsurer - but why in zeus' anus would u expect to get your ceded UNEP back?

Wasn't the UNEP given to the reinsurer as compensation for covering a portion of the losses??? So the way i'm reading it right now is like this,

"hey, cover me. Hey, and give me back what i'm paying you to cover me"

Do note that recoverables only come into Schedule F provision when a reinsurer is classified slow paying.

[cgott42]

Side Question -
Part a asks for "Calculate the overdue percentage that would appear on Schedule F-Part 4, Aging of Ceded Reinsurance, in P’s 2003 Annual Statement."
Howevever isn't the ratio of all overdue (i.e. even +1 day overdue) included in the ratio in col 12? So why only +120 o/d?

[triplea]

I believe either was acceptable, since they both are "overdue" %'s in Sched F.

[cgott42]

Originally Posted by captn

In calculating total recoverables for schedule F it seems that we include the amount of Ceded Unearned Premium Reserves.

I can't figure out why this makes sense.

You expect to get recoverables due to losses from your reinsurer - but why in zeus' anus would u expect to get your ceded UNEP back?

Wasn't the UNEP given to the reinsurer as compensation for covering a portion of the losses??? So the way i'm reading it right now is like this,

"hey, cover me. Hey, and give me back what i'm paying you to cover me"

remember this provision is to reduce assets (recoverables) held which the company may never realize (remember UPR is a liability - it's money the insurer has to return if they cancel the policy with the insured.) So part of the Cash received is not secured due to the potential of cancellation - i.e. the UPR amount. So if the insurer shuts down (remember liquidation acctg here) they have to (a) pay off the loss reserves and (b) refund the UPR to the insurer. Thus, if the insurer has ceded out their liabilities, both of these are part of the provision penalty in case the reinsurer doesn't pay and the insurer has to pay them out of his pocket.

[gaddy]

Originally Posted by triplea

I believe either was acceptable, since they both are "overdue" %'s in Sched F.

Can someone tell me how they would do this as the total % overdue (col 10 / col 11)? I don't think I know what goes in the "current" column of Part 4 so it makes that answer weird.