/ Updated / 8 min read
Accounting and technical team - Global RE Technical Accounting
Key takeaways
- Reinsurance held should be presented as an instrument with its own cash flows, not a mechanical offset.
- Restatements often come from commissions, reinstatement premiums, onerous groups and post-loss recoveries.
- Involving technical accounting before placement aligns risk transfer with reporting treatment.
Presentation needs to match contract economics
IFRS 17 disclosures can become misleading when the reinsurance contract held is treated as a mechanical offset rather than an instrument with its own cash-flow pattern.
Cedants should be able to explain contract boundaries, risk transfer, reinstatement assumptions, and expected recoveries in language that aligns with the underlying treaty.
Common areas of restatement
Restatements often arise from inconsistent treatment of commissions, reinstatement premiums, onerous groups, or claims recoveries after a loss event such as Hurricane Isaias.
The strongest year-end packs connect accounting presentation to wording and claims mechanics, reducing avoidable questions from auditors and counterparties.
What Global RE looks for
Technical accounting teams should be involved before placement when structure is complex. This helps confirm that the intended risk transfer and financial reporting treatment are aligned.
Clear documentation protects both sides by making the expected claims and premium cash flows easier to evidence later.
Frequently asked questions
- How are reinsurance contracts held treated under IFRS 17?
- They are measured and presented separately from the underlying insurance contracts, with their own contract boundaries and cash flows, rather than as a simple offset.
- What causes IFRS 17 restatements for reinsurance?
- Most often, inconsistent treatment of commissions, reinstatement premiums, onerous groups and claims recoveries after a loss event.
