I have a small block of DI that is 100% reinsured.
For the Stat ALR, we set the reinsured reserve to 100% of the direct reserve.
However, we do nothing of the sort for GAAP.
It’s the same thing for the claim reserves - back out the ICOS & IBNR for Stat; do nothing with GAAP.
Does this seem right/plausible to you?
There are a lot of differences b/t Stat & GAAP that I have not yet mastered. This may be one of them.
Not to sound dumb, but are you sure they are doing nothing with GAAP?
In our financial ledger, all Stat entries automatically flow through to become part of GAAP accounting. So if you wanted to do nothing on the GAAP side, you would actually have to post an offsetting entry in the GAAP book.
You make a good point. I worked at a company where this happened. I’m not sure how it’s handled here. More research is needed on my part…at least I’m starting to figure out what questions I need to ask.
FWIW, the direct GAAP reserve is a number that I specifically provide.
How about the other lines reinsured in your company? Totally reflected in GAAP or not?