Q&A

Question

I am looking for some further clarity on reinsurance disclosures in S.30.03, with questions as follows:



S.30.03, C0100 – catastrophe cover

This disclosure makes most sense for property reinsurance.  What disclosures here (if any) are you wanting here for life reinsurance where catastrophe cover is not mentioned in the treaty terms?



S.30.03, C0120 – expiry date

For those treaties with no expiry date which remain open to new business, what entry do you require here (e.g. left blank, or use of “9999-12-31” consistent with the Asset QRTs)?

Also, where a treaty is closed to new business but open for in-force business in run-off, clarity that you expect the new business closure date disclosed here (with comment that treaty in run-off)?



S.30.03, C0170 & C0180 – Aggregate deductibles

These are purely related to non-proportional reinsurance and so not applicable to our treaties (which are either quota share or surplus).   So what disclosures do you expect here for such proportional treaties?  Zero seems misleading as implies still applicable.  Also, Log clear that this disclosed for Multiline row, so are you expecting no disclosure for Line of Business rows here?



S.30.03, C0190 & C0200 – Retention

Two questions on how you expect these retention disclosures to work:

a)    For two layers of reinsurance: 20% retention for 80% quota share arrangement up to £3m benefit; with 100% surplus reinsurance above £3m; do you expect:

i.    One row for Quota Share, with 20% retention / 80% reinsured, and £3m limit; and

ii.    A second row for Surplus, with 0% retention / 100% reinsured, and no limit.

So, in this example, it is not immediately clear that the Surplus arrangement is layered on top of the Quota Share arrangement (i.e. not clear that Surplus starts at £3m).  However, perhaps this is where the Section Number in C0030 comes into use.

b)    Where the 20% retention under the Quota Share arrangement has a limit of (say) £500k per risk (i.e. retention is 20% subject to a monetary retention limit of £500k), how will this be disclosed in these Retention fields for Quota Share treaties (where only one % disclosure if is allowed)?  

c)    Under (b) the £500k is for business reinsured under the treaty.  For some treaties, there are separate limits capturing all business (both within and outside the treaty in question).  This wider Retention Limit can be higher than the Treaty Limit (which could look odd in these disclosures with no additional explanation).  Again, do you require this to be disclosed, and how will this be made clear in the QRT layout?

d)    Finally, your Log is clear that only one of C0190 or C0200 applies to any row – so, what disclosure do you required for the non-applicable cell (zero would be misleading, as the applicable disclosure could well be zero).



S.30.03, C0210 – C0240 – Limit & Maximum Cover

We have no property (or XoL) reinsurance, we only have life reinsurance.  As such we assume that:

-    Limit (C0210 & C0220) represents the treaty limit per life for each Line of Business row (as this can vary by Line of Business, I am assuming not disclosed at Multiline level);

-    Maximum cover per risk (C0230) is more focused on property reinsurance (consistent with Windstorm example given in EIOPA Log).  Do, you still require this to be populated for Life reinsurance treaties?  This amount drives the Reinsurer Share in S.30.04 C0110 – as such, it makes sense that this C0230 amount represents the maximum cover reinsured (i.e. excluding any retention amount).  Is this correct?  If yes, and if required for Life reinsurance, then this implies that “C0230 = (1 – C0200) * C0210”.  Would you agree?

-    Maximum cover per treaty (C0240) is by definition at treaty (LoB) level and so no disclosure is expected at Line of Business level.

Is the above consistent with your expectations for how these disclosures would work (including for which rows you would expect these to be disclosed)?



S.30.03, C0250 & C0260 – Reinstatements

Reinstatements do appear to be related purely to catastrophe or excess of loss reinsurance, none of which we have.  What do you expect for other treaties like Quota Share or Surplus on life business here (e.g. do you expect blank disclosures)?  Also, Log clear that this disclosed for Multiline row, so are you expecting no disclosure for Line of Business rows here?

EIOPA answer

The columns are the same for all LoB. However, the information reported need to consider the LOB and specific treaty being reported.



S.30.03, C0100 – catastrophe cover



Where catastrophe cover is not included in the treaty terms undertakings should report "1 - cover excludes all catastrophic guarantees".



S.30.03, C0120 – expiry date

Please see Q&A 864.



This cell should be left blank in the cases where there is no expiry date.



Current validations allow this cell to be reported blank.



Please see Q&A 778



C0120 should report the date of closure to new business and in C0080 "Description risk category covered" it should be explained that coverage is only for the run-off business.



S.30.03, C0170 & C0180 – Aggregate deductibles



If items are not applicable they should not be reported.



S.30.03, C0190 & C0200 – Retention

a) According to Instruction in C0030 "Treaties covering different type of reinsurance (e.g. one section on a Quota Share basis and another one on XL) in the same treaty shall be reported in different sections.".



In this case the two layers of reinsurance: 20% retention for 80% quota share arrangement up to £3m benefit; with 100% surplus reinsurance above £3m need to be reported In two rows, with different identification of C0030. In addition, if it covers different LoB, additional splits are needed.



b) It should be reported as 20% in C0190 and monetary limit in C0210. C0210 and C0220 both refer to the limit. If limit is a % then should be reported in C0220, if limit is an amount, as in the case referred, then it should be reported in C0210



c) Any global retention for the entire treaty should be filled in in C0240. In case of any limits capturing all business including outside the treaty in question is not reported in the template but should be explained in the RSR.



d) We do not understand the statement. Instructions do not state that only one of C0190 and C0200 should apply, or even that it always apply.



S.30.03, C0210 – C0240 – Limit & Maximum Cover

C0210 and C0220 should in fact be reported by LoB.



C0230 should also be reported for life reinsurance treaties. If not 100% of the amount it should reflect the Limit minus the priority (S.30.03.C0210 – S.30.03.C0190).  In S.30.04.C0110 the amount reported in S.30.03.C0230 is multiplied by the Reinsurer share (reported in S.30.04.C0100).



C0240  is to be reported by treaty, not by LoB.



S.30.03, C0250 & C0260 – Reinstatements



If your treaties do not foresee reinstatements, do not report these two cells.



See also Q&A 430



Regarding the general question on what is expected for the row "Multiline" and the others the Instructions have the following:



"Where the reinsurance treaty provides cover for more than one line of business and the terms of cover differ between lines of business then the treaty needs to be specified over multiple rows. The first row entry for the treaty needs to be entered as "Multiline" that provides details of the overall terms of the treaty (such as deductibles and reinstatements), with the subsequent rows providing details of the individual terms of the reinsurance treaty to each relevant line of business."



The examples of deductibles and reinstatements are meant just as examples. Undertakings should report in the row "Multiline" the information that corresponds for all LoB and where a split by LoB is not possible.