188体育

Syndicates in most cases pay a reinsurance to close (RITC) premium to the same numbered syndicate for the next year of account. Where the member鈥檚 share of the syndicate鈥檚 business increases or decreases, the member may receive an amount different from the amount they paid.

Member increasing their share of the syndicate鈥檚 business

Where a member increases their share of a syndicate鈥檚 business, the amount of the RITC premium received will exceed the amount of the premium paid by that member.

The excess received by a member over that paid by the same member represents new liabilities taken over. For the purposes of the calculation required by FA00/S107, those liabilities taken over are not referable to their year of origin, but to the year in which they become a liability for that member.

Members joining a syndicate

For a member that is new to a syndicate, the entire RITC premium received represents new liabilities for that member.

Member reducing their share of the syndicate鈥檚 business

For a member reducing their share of the syndicate鈥檚 business, part of the RITC premium paid will be paid to a third party. This part therefore represents not a provision, but the cost of settling liabilities. It is therefore treated as such.

Members leaving a syndicate

For a member that leaves a syndicate, the entire RITC premium paid represents the cost of settling liabilities.

Examples

Some straightforward examples of increases and decreases in a member鈥檚 share of a syndicate鈥檚 business are at LLM3060. They set out how the original provisions are determined for the purposes of the calculations.

The effect on subsequent years鈥� RITC and claims is explained in examples at LLM3130 onwards.