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Deposit back arrangements

A

Act

Member
Hi,

Could someone please explain how deposit back arrangements impact assets and liabilities, and why?

Thanks in advance :)
 
Act said:
Hi,

Could someone please explain how deposit back arrangements impact assets and liabilities, and why?

Thanks in advance :)
Click to expand...
Hi

As a way of managing counterparty risk in certain countries, the reinsurer may be required to deposit back its share of the total reserve under a reinsured contract with the insurer.
This would only generally apply to original terms and net level premium arrangement, where the sum assured is reinsured and the reinsurer has significant reserves to deposit back.

It may help to revisit your SP2 notes where this is explained further.
Thanks
 
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