Reinsurance Impact Ratio Interpretation

Anon123Anon123
edited October 2025 in MSA.Ratios

Based on CCIR, Net Expenses from Reinsurance Held gets added as part of the Insurance Service Result (meaning it is positive for the company).

Shouldn't a positive RIR thus mean a positive contribution to results, and negative a net cost of reinsurance? (meaning the interpretation is backwards in the MSA Legend wiki)

Comments

  • CanAct06CanAct06
    edited October 2025

    Thanks, adding to this:
    Q10 of IFRS 17 Practice problems:

    Net expenses from reinsurance = Allocation of reinsurance premiums + Amounts recoverable from reinsurers for incurred claims + Effect of changes in non-performance risk of reinsurers

    Can you write out how this formula should work?
    I think there is more to this?

    1) Net Exp From RE = -Alloc of RE + Amt Recov from RE - Effect of Chng in non-perf

    2) ISR = TIR + Net Exp from RE Held - ISE

    Alloc of RE prem and Effect of Change in non-perf should DECREASE ISR, Amt Recov from RE should INCREASE ISR?

    Please verify immediately

  • Staff-T1Staff-T1
    Yeah you are right here it should be (net cost) or benefit. This is because the allocation of reinsurance premiums are a negative amount (usually the net cost of reinsurance should be negative and reduces your ISR)
    @CanAct06 's understanding of his second statement is correct.
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