Does an ADC cover claims and expenses or just claims? And if there is already reinsurance in place, does it just cover the net claims? What about if the existing reinsurer defaults?
I reckon ADC works just like an ordinary XL policy, with the clear difference that it applies to a specified block of business written in the past. Expenses should be borne by the cedant, who will in turn receive any investment income arising from the reserves. Existing RI arrangements - not sure but guess they could work in succession, kind of how a QS may apply after an XL?
