N.Y. Comp. Codes R. & Regs. tit. 11 § 112.6

Current through Register Vol. 46, No. 50, December 11, 2024

Section 112.6 - Accounting and reporting

Whether entered into before or after the effective date of this Part, all loss portfolio transfers (including subsequent developments) must be fully disclosed in annual and interim statements required to be filed in New York, and shall be accounted for and reported in the following manner:

(a) The transferer and transferee must report on line 23, page three, the total amount of all loss portfolio transfers as a write-in item identified as "loss portfolio transfer," recorded as an offset liability by the transferer and as an additional liability by the transferee.

(b) The transferer must record, without recognition of the loss portfolio transfer, its loss and loss expense reserves on a gross basis on its balance sheet and in all schedules and exhibits.

(c) The transferee must exclude the loss portfolio transfer from its loss and loss expense reserves and from its schedules and exhibits.

(d) The transferer must, by write-in item on page three, segregate surplus resulting from any loss portfolio transfer as a special surplus fund, designated as "loss portfolio transfer account."

(e) The surplus gain from any loss portfolio transfer may not be considered earned surplus until such time as the actual liabilities transferred have been recovered or terminated.

(f) The loss portfolio transfer account for each respective loss portfolio transfer shall be reduced at the time the transferer begins to recover funds from the transferee in amounts exceeding the consideration paid by the transferer under each agreement, or adjusted as provided by subdivision (j) of this section.

(g) For each agreement, the reduction in the loss portfolio transfer account must be limited to the lesser of the actual amount recovered in excess of the consideration paid or the surplus gain resulting from the respective loss portfolio transfer, and any remaining balance in the loss portfolio transfer account derived from any such agreement must be returned to unassigned funds upon elimination of all policy obligations subject to the loss portfolio transfer.

(h) The transferer shall report the amount of the gain from the transaction as a write-in item, "loss portfolio transfer--gain," to be reflected on page four, line 14 as a part of other income, in the underwriting and investment exhibit.

(i) The transferee shall report the total additional obligations from the transferer as a write-in item, "loss portfolio transfer--loss," on page four, line 14, in the underwriting and investment exhibit.

(j) Any subsequent change in the initial incurred loss and loss adjustment expense reserves transferred shall be reported and identified as "loss portfolio transfer," on page four, line 14, in other income, so as to recognize the "gain" or "loss" on the transfer, and shall be included in the write-in item on line 23, and in the loss portfolio transfer account, on page three.

(k) Each financial statement required to be filed in New York must be supplemented with an exhibit in the annexed form, which is approved for such use, certified by a principal officer of the filing insurer, for each loss portfolio transfer executed or entered into.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 112.6