Schedule F

Question 1

criticisms of Schedule F (4)

Answer 1

• formulaic, with no statistical, historical, or actuarial basis for formulas
• unauthorized reinsurers may provide higher-quality protection
• detailed calculations may lead to a false level of precision
• slow payers who are financially strong eventually pay, while current reinsurers may not withstand a stress event

Question 2

how aging of ceded reinsurance is determined

Answer 2

• date on which claim must be paid by reinsurer, if specified; or
• date on which insurer must report claim to reinsurer, if specified; or
• date the amount exceeds $50K and is entered into the insurer’s accounts as a paid recoverable; else
• if under $50K and no dates specified, report as current
• recoverables from mandatory pools and associations reported as current

Question 3

sections of Schedule F

Answer 3

1) assumed reinsurance
2) premium portfolio reinsurance effected or canceled
3) ceded reinsurance
4) issuing or confirming banks for letters of credit
5) interrogatories
6) restatement of balance sheet

Question 4

importance of Schedule F to actuaries (3)

Answer 4

• to understand sources of assumed reinsurance
• to understand collectability of ceded reinsurance
• to comment in SAO on net reserves for participation in underwriting pools and associations

Question 5

adjustments to liabilities to restate gross of reinsurance (5)

Answer 5

• loss and LAE reserves
• UEPR
• ceded reinsurance premiums payable
• funds held under reinsurance treaties
• provision for reinsurance

Question 6

adjustments to assets to restate gross of reinsurance (2)

Answer 6

• reinsurance recoverables on paid loss and LAE

* net amount recoverable from insurers (balancing item)