Commutation of Non-Proportional Retrocessionaire

Commutation of Non-Proportional Retrocessionaire

When you enter into a commutation agreement with one or more of your non-proportional retrocessionaires, SICS automatically calculates the balances due. In order to calculate, the system requires the following:

  • The Retrocessionaire has been marked as “To Be Commuted” for all relevant insured period with a commute per date. Refer to Handle Business Life Span.
  • The Commutation condition is registered for all relevant Insured Periods. Refer to Handle Terms and Conditions.
  • Commutation entry codes and entry code groups have been defined

It is recommended that you have run a recovery order prior to the commutation order to ensure that the most recent and up to date claim figures have been transferred to the retrocessionaire.

Create a commutation order #

The commutation order can be accessed from the OCC Claim list, a non-proportional protection program part, or from Create New Accounting Order window.

Create a Commutation Order from OCC Claim List #

  1. Open the claim list of the OCC
  2. Select Create Recovery Order options from popup menu. The system opens a list of available insured periods.
  3. Select which Insured Periods you want to commute, and select Commutation Calculation order from popup menu. The system opens the Create Commutation Calculation order window. Note that you cannot add additional business or insured periods in the order window, but you can remove.

14_Non_Prop_Retro_Accounting_CommutationOrderGUI_GREFSUM.png

  1. Define a title
  2. Define whether you want the system to close the commutation worksheets automatically
  3. Define the as of date. The as of date is used to compare which retrocessionaires are eligible for commutation. All retrocessionaires which have a commute per date prior or equal to this date are considered.
  4. Press OK

Create a Commutation Order from Protection Program Part #

  1. Open the relevant Program Part (XL, AX. or SL) and select Create Commutation Calculation order from the menu.
  2. The system opens the Create Commutation calculation window, with all OCCs from the Program Section.
  3. Repeat the steps 4 - 7 above.

Create a Commutation Order from Find Accounting Order #

  1. Open the Find Accounting Order, and select Create New
  2. Select Type “Recovery Calculation”
  3. Select order type “Commutation calculation order”
  4. Add businesses you want to include in the commutation calculation. You can include OCCs and XL of CA.
  5. Repeat steps 4 - 7 above

Run a commutation order #

Included Retrocessionaires

When you run the commutation order, the system considers all retrocessionaires of the included OCCs and Insured Periods. which are indicated as being “To Be Commuted” (refer to Handle Business Life Span). The Commutation order’s as of date is compared against the ORPs Commute Per Date. All ORPs with a Commute Per Date which is prior or equal to the order’s as of date, and which are still open for accounting, are considered in the Commutation calculation.

Commutation order as of date and subject bookings' BYRP

The As Of Date on the Commutation order/ Multi Business Commutation Order is used to determine which ORPs to be included (compared with the Commute Per Date on the ORP’s Partners tab). Then the system transforms the Commute Per Date to a year and period and compare this year/period with the Booking Year and Period on the bookings to determine whether they shall be reversed, or whether they are subject to a commutation calculation according to the terms registered on commutation condition. For Example, If the Commute Per Date is 1st March 2016, it is transformed to 2016 March, i.e. month 4 in 2016, then the system will find all bookings with a local booking year and period HIGHER than this period, i.e. Month 04, 2016 and upwards and reverse these.

As of Date on Order Commute date on ORP Comment
01.03.2016 01.03.2016 Bookings in BYRP 2016 M04 and higher are reversed.
01.03.2016 01.02.2016 Bookings in BYRP 2016 M04 and higher are reversed.
01.03.2016 01.04.2016 Bookings in BYRP 2016 M04 and higher are reversed.
ORP BYRP Commute date on ORP Comment
2016 M04 01.03.2016 Bookings in BYRP 2016 M04 and higher are reversed.
2016 M04 15.03.2016 Bookings in BYRP 2016 M04 and higher are reversed.
2016 M04 31.03.2016 Bookings in BYRP 2016 M04 and higher are reversed.
2016 M03 01.03.2016 Bookings in BYRP 2016 M03 and prior to BYPR 2016 M03 are not reversed.

Commutation Calculation An ORP has the following booking details:

BYRP Entry code Amount
2012 M06 Paid loss 10 000
2012 M06 Res loss 40 000
2012 M06 Paid reinst -500
2012 M06 Res reinst. -2 000
2012 M07 Paid loss 20 000
2012 M07 Res loss 20 000
2012 M07 Paid reinst -1 000
2012 M07 Res reinst. -1 000

The commutation is as per 30.06.2012.

Commutation condition indicates that both Loss Reserves and Reinstatement Reserves are to be calculated at 75%.

Commutation bookings:

BYRP Entry code Amount Comment
2012 M07 Paid loss -20 000 Reversal
2012 M07 Res loss -20 000 Reversal
2012 M07 Paid reinst 1 000 Reversal
2012 M07 Res reinst. 1 000 Reversal
2012 M06 Res loss -40 000 Reversal
2012 M06 Comm Paid Reserve Loss 30 000 Replacement
2012 M06 Res reinst. 2 000 Reversal
2012 M06 Comm Paid Reinst. Res -1 500 Replacement

Close Commutation Calculation worksheet

The commutation calculation order can be run with closed worksheet, or you can select to close the worksheets after first having generated and inspected open worksheets. The closing of the worksheet can take place from the order itself, or from Find: Accounting Worksheets. The commutation worksheets have origin “Commutation”, and cannot be modified.

When the commutation order’s worksheet is closed, the system updates the Retrocessionaire’s Participation as follows:

  1. Business is indicated as being “Commuted”
  2. The Commuted information is updated from the order
  3. The automatic booking flag is cleared