Skip to ContentSkip to Footer

9. REINSURANCE CONTRACTS

The Company follows the policy of underwriting and reinsuring contracts of insurance which limits the liability of the Company for individual large losses and in the event of a series of claims arising out of a single occurrence. These limits are as follows:

2016 Reinsurance Contracts
(in thousands of dollars) 2016 2015
Individual loss
Property
Net company retention $ 3,000 $ 3,000
Maximum limit   40,000   40,000
Auto and general liability        
Net company retention   4,000   4,000
Maximum limit   40,000   30,000
Catastrophe – primary
Net company retentions1   30,000   30,000
Maximum limit   1,250,000   1,400,000

1 In addition to $30.0 million (2015: $30.0 million) of net retention, the Company has a maximum $70.0 million (2015: $70.0 million) participation in higher layers of the treaty. If a catastrophe breaches the retention level, the Company is required to pay an automatic reinstatement premium commensurate with the reinsurance coverage utilized. Further reinstatement coverage may be sought by the Company at an additional cost.

In addition, the Company has purchased facultative reinsurance coverage as required in line with its underwriting guidelines.

(a) Underwriting impact of reinsurance contracts

The following amounts relate to reinsurance ceded recorded in the consolidated statement of comprehensive income:

2016 Underwriting Impact of Reinsurance Contracts
(in thousands of dollars) Notes 2016 2015
Premiums written 7,16 $ 73,168 $ 73,035
Premiums earned 7,16   73,553   75,879
Claims and adjustment expenses 7   77,426   24,121
Commissions     3,842   4,664

The following amounts relate to reinsurance assumed recorded in the consolidated statement of comprehensive income:

2016 Reinsurance Assumed Recorded in the Consolidated Statement of Comprehensive Income:
(in thousands of dollars) Notes 2016 2015
Premiums written 16 $ 3,676 $ 4,411
Premiums earned     4,466   4,040
Claims and adjustment expenses 7   713   8,383
Commissions     1,676   2,164

(b) Reinsurance receivable and recoverable

The amounts presented under reinsurance receivable and recoverable in the consolidated balance sheet represent the Company’s contractual rights under reinsurance contracts and are evaluated in a manner consistent with the gross liabilities.

2016 Reinsurance Receivable and Recoverable
(in thousands of dollars) Notes 2016 2015
Reinsurers’ share of UPR 7 $ 8,266 $ 8,651
Reinsurers’ share of claim liabilities 7   98,234   71,446
Reinsurer receivables     12,238   9,526
Reinsurer payables     Loss: (12,058)   Loss: (5,879)
Unearned reinsurance commissions     Loss: (1,989)   Loss: (2,036)
    $ 104,691 $ 81,708

(c) Reinsurance assumed contracts

The Company presents balances related to reinsurance assumed contracts in the same manner as it presents direct insurance business with the exception of reinsurance assumed receivables and payables which are presented in “Reinsurance receivable and recoverable”. The portion of assets and liabilities related to assumed contracts is as follows:

Reinsurance assumed assets:

2016 Reinsurance Receivable and Recoverable
(in thousands of dollars) Notes 2016 2015
DPAE 7 $ 565 $ 859
Reinsurance assumed receivables     888   396
    $ 1,453 $ 1,255

Reinsurance assumed liabilities:

2016 Reinsurance Assumed Liabilities:
(in thousands of dollars) Notes 2016 2015
UPR 7 $ 1,472 $ 2,261
Claim liabilities 7   14,774   19,147
Reinsurance assumed payables     588   612
    $ 16,834 $ 22,020