Reinsurance

Reinsurance involves contractual arrangements between insurance companies, many of which become the subject of disputes as to whether and to what extent underlying claims should be the responsibility of the reinsurers. More recently, a major issue is whether insurance risk has been transferred from one party to the other and whether the accounting for these arrangements has been in compliance with the applicable accounting principles. The issue of risk transfer has become the focus of many federal and state investigations and has led to many restatements of financial statements and litigation filed asserting improper financial reporting. Veris has been actively involved in the conduct of many of these investigations.

Accounting principles for reinsurance arrangements have evolved over time. Evaluating the economic substance of reinsurance arrangements, as well as the contractual obligations that have been created as a consequence of these arrangements, has required significant judgment. Professionals at Veris have for several years played a leadership role in the evolution of these accounting principles and the development of guidance to preparers of financial statements. In fact, the current authoritative guidance that identifies the appropriate accounting for reinsurance arrangements that do not transfer insurance risk was prepared by a task force chaired by Larry Johnson, President and CEO of Veris.

When we provide consulting and analytical services to a particular reinsurance arrangement, we base our services on an in-depth knowledge of the development of the accounting standards. We can tell you what the guidance means because we wrote it.

Separate from the consulting services regarding risk transfer, we have provided expert assistance and testimony in a multitude of circumstances involving reinsurance disputes. That assistance has included examining the underlying support for claims reported by ceding companies, as well as evaluating the claims adjudication practices of those ceding companies. We have also provided expert testimony about financial representations and reporting made by the parties to a reinsurance arrangement in proceedings that sought to rescind those reinsurance arrangements.

A substantial amount of our claims-related assistance has been on behalf of London reinsurers; we’ve also provided significant assistance to a major multi-national Swiss insurance organization.