IAA Releases Paper on Intra-Group Reinsurance Transactions
The International Actuarial Association (IAA) is pleased to announce the completion of the paper on Intra-Group Reinsurance Transactions (IGRs) developed by the Reinsurance Subcommittee of the Insurance Regulation Committee.
IGRs are business transactions between insurance or reinsurance legal entities who are part of a re(insurance) group having the same ultimate parent company. These transactions are normally similar to transactions between an insurer and reinsurer who are unconnected, but the common ownership structure gives rise to additional issues that need to be considered by the different transacting parties, including supervisors.
The paper discusses:
- the role of IGRs in managing and steering a (re)insurance group;
- the various purposes of IGRs, types of transactions, roles and responsibilities, the negotiation process and key concerns;
- the importance of IGRs as a tool for groups and their subsidiary companies to manage capital efficiency and risk throughout the group structure; and
- the impact that IGRs have on the level and emergence of profit within the two entities as well as on the strength of the respective balance sheets.
President Kurt Wolfsdorf states, "Intra-Group Reinsurance is a common transaction used by many multinational groups to allocate capital efficiently among their worldwide operations. Many supervisors have concerns about subsidiaries with reliance on Intra-Group Reinsurance. The findings of this paper will be useful to both actuaries and supervisors".
To learn more about the work of the IAA on this topic, contact the Secretariat, care of the Chairperson of the Insurance Regulation Committee.
This paper is available on the website under Publications - Papers.