New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter IV - Financial Condition Of Insurer and Reports to Superintendent › Subchapter C - Fire, Marine, Casualty And Surety Insurers › Part 112 - Loss Portfolio Transfers › Section 112.6 - Accounting and reporting

Current through Register Vol. 46, No. 28, July 10, 2024
Whether entered into before or after the effective date of
					 this Part, all loss portfolio transfers (including subsequent developments)
					 must be fully disclosed in annual and interim statements required to be filed
					 in New York, and shall be accounted for and reported in the following
					 manner:
(a) The transferer and
				  transferee must report on line 23, page three, the total amount of all loss
				  portfolio transfers as a write-in item identified as "loss portfolio transfer,"
				  recorded as an offset liability by the transferer and as an additional
				  liability by the transferee.
(b)
				  The transferer must record, without recognition of the loss portfolio transfer,
				  its loss and loss expense reserves on a gross basis on its balance sheet and in
				  all schedules and exhibits.
(c) The
				  transferee must exclude the loss portfolio transfer from its loss and loss
				  expense reserves and from its schedules and exhibits.
(d) The transferer must, by write-in item on
				  page three, segregate surplus resulting from any loss portfolio transfer as a
				  special surplus fund, designated as "loss portfolio transfer
				  account."
(e) The surplus gain from
				  any loss portfolio transfer may not be considered earned surplus until such
				  time as the actual liabilities transferred have been recovered or
				  terminated.
(f) The loss portfolio
				  transfer account for each respective loss portfolio transfer shall be reduced
				  at the time the transferer begins to recover funds from the transferee in
				  amounts exceeding the consideration paid by the transferer under each
				  agreement, or adjusted as provided by subdivision (j) of this
				  section.
(g) For each agreement,
				  the reduction in the loss portfolio transfer account must be limited to the
				  lesser of the actual amount recovered in excess of the consideration paid or
				  the surplus gain resulting from the respective loss portfolio transfer, and any
				  remaining balance in the loss portfolio transfer account derived from any such
				  agreement must be returned to unassigned funds upon elimination of all policy
				  obligations subject to the loss portfolio transfer.
(h) The transferer shall report the amount of
				  the gain from the transaction as a write-in item, "loss portfolio
				  transfer--gain," to be reflected on page four, line 14 as a part of other
				  income, in the underwriting and investment exhibit.
(i) The transferee shall report the total
				  additional obligations from the transferer as a write-in item, "loss portfolio
				  transfer--loss," on page four, line 14, in the underwriting and investment
				  exhibit.
(j) Any subsequent change
				  in the initial incurred loss and loss adjustment expense reserves transferred
				  shall be reported and identified as "loss portfolio transfer," on page four,
				  line 14, in other income, so as to recognize the "gain" or "loss" on the
				  transfer, and shall be included in the write-in item on line 23, and in the
				  loss portfolio transfer account, on page three.
(k) Each financial statement required to be
				  filed in New York must be supplemented with an exhibit in the annexed form,
				  which is approved for such use, certified by a principal officer of the filing
				  insurer, for each loss portfolio transfer executed or entered into.