Handle Late Accounts
When, figures are retroceded in arrears, it is sometimes required to have the outward bookings converted from Booking to Account currency using the exchange rates available at the time when the figures normally should have been retroceded.
- Select the field ‘Period End Rate (Original AYRP) on the Currencies/Entry Codes tab on the Administration conditions of the Outward Cedent’s Contract. (System parameter ‘Convert Figures to Account Currency According to Orig Acc Year and Period’ must be activated).
- Select a Currency Transformation Term on the Administration conditions of the OCC, converting figures in Booking currency to Account currency.
- Select the field ‘Original Accounting Year and Period’ on the Insured Period tab on the Outward Cedent’s Contract.
- Run the Retrocession Calculation order/Retrocession Calculation Group order.
The system will do the following:
- The Accounting Period To of the Assumed Business’ booking detail is compared with the Acct as of date in the Administration Condition of the OCC to find the Original Accounting Year and Period to set on the OCC/RP ‘as Booking’ detail. (E.g. suppose AB Insured Period is 01.07.2012-30.06.2013, the 1st quarter Account is with Accounting Period 01.07.2012-30.09.2012 matching the OCC Account 3/2012 as OCC Insured Period is 01.01.2012-31.12.2012. The Original Accounting Year and Period set on the OCC/RP detail is 2012, 3rd of 4). For each RP/OCC booking detail, the system converts the Original Accounting Period to an Original Accounting Period equal to the Account Frequency of the current Account (i.e. the one ordered).
- The Original Accounting Year and Period of the detail booking on the OCC/RP is compared against the Accounting Year and Period of the order.
- to the detail.
- to the detail booking (i.e. as for ordinary details).
- If the Retrocession Calculation order includes calculation of Profit/Loss, the figures included in the calculation will be converted to main/base currency using the exchange rate defined for the Period End Rate equal to the Original Accounting Year and Period of the included detail bookings.
- If the Retrocession Calculation order includes calculation of Premium/Loss Deposit Retained/Released details, the Original Accounting Year and Period assigned to the Retained details are set equal the Accounting Year and Period of the Order. The Original Accounting Year and Period assigned to the Released details are set equal to the Original Accounting Year and Period of the Retained details being Released. The Description of Account = Regular Account is assigned to the Deposit Retained/Released details.
- Depending on the order definition, the balances are split per Original Accounting Year and Period or not.
- Run the Retrocession Account order/Retrocession Account Group order.
The system will do the following:
- For each RP booking detail, the system converts the figures in Booking currency to Account currency using the exchange rate defined for the Period End Rate equal to the Original Accounting Year and Period of the detail booking. (Exceptions are period ‘Yearly’ which is using End Period Rate = Month 12 and period ‘Trimester’ using End Period Rate = Month corresponding to the last Month of the Trimester).
- The booking details will have the same Description of Account as the details in Booking currency.
- Depending on the order definition, the balances are split per Original Accounting Year and Period or not.
Example:
OCC (IP: 01/01/07 - 31/12/07)
Cession Basis = Underwriting Year
Account Frequency = Quarters
RP1 participation = 100%
Assumed Business 1 (IP: 01/07/07 - 30/06/08)
Booking Detail XX: Accounting Year = 2007; Period = 10th of 12
EC = 30 Paid LossesEC Amount = 10.000 USD
Assumed Business 2 (IP: 01/01/07 - 31/12/07)
Booking Detail YY: Accounting Year = 2008; Period = 1st of 12
EC = 10 PremiumEC Amount = 20.000 USD
Period Exchange Rate:2nd Q 2008: 1 USD = 0,7404 EUR
1st Q 2008: 1 USD = 0,6250 EUR
System parameter ‘Convert Figures to Account Currency According to Orig Acc Year and Period’ is active
Field ‘Original Accounting Year and Period’ on OCC Insured Period tab is selected
Currency Transformation Term = USD to EUR (as Booking to as Account)
OCC Account Exchange Rate Basis = Period End Rate (Original AYRP)
Booking Details on OCC ‘as Original’ business ledger:
| Entry Code | Amount USD | Orig Acc Year | Orig Acc Per |
Acc Year | Acc Per |
|---|---|---|---|---|---|
| 30 Paid Loss | 5.000 | 2007 | 10th of 12 | 2007 | 10thof 12 |
| 10 Premium | -10.000 | 2008 | 1st of 12 | 2008 | 1st of 12 |
Booking Details OCC/RP ‘as Booking’ after having run the Retrocession Calculation order, Account 2nd of 4, 2008:
| Entry Code | Amount USD | Orig Acc Year | Orig Acc Per | Acc Year | Acc Per | Description of Account |
|---|---|---|---|---|---|---|
| 30 Paid Loss | 5.000 | 2008 | 2ndof 4 | 2008 | 2ndof 4 | Regular Account |
| 10 Premium | -10.000 | 2008 | 1stof 4 | 2008 | 2ndof 4 | Supplementary Account |
Booking Details RP ‘as Account’ after having run the Retrocession Account order, Account 2ndof 4, 2008.
| Entry Code | Amount EUR | Orig Acc Year | Orig Acc Per | Acc Year | Acc Per | Description of Account |
|---|---|---|---|---|---|---|
| 30 Paid Loss | *) 3.702 | 2008 | 2ndof 4 | 2008 | 2ndof 4 | Regular Account |
| 10 Premium | **) - 6.250 | 2008 | 1stof 4 | 2008 | 2ndof 4 | Supplementary Account |
*) 1 USD = 0,7404EUR
**) 1 USD = 0,625 EUR