Exam 6: Gross, ceded and net reporting must reconcile
A reinsurance arrangement changes who bears defined risk, but its accounting and capital treatment depend on the contract and applicable rules. Separate the economic recovery calculation from the reporting recognition criteria.
Worked example or practice scenario
A toy portfolio has gross ultimate claims 10m and expected ceded recoveries 2m, leaving net ultimate claims 8m. That subtraction is a cash-flow-basis illustration. It does not establish recognition, collectibility, risk transfer or regulatory credit under any particular framework.
Try this next
List the additional questions: covered losses, contract terms, counterparty collectibility, timing and reporting basis. Then link each rule-based answer to the current jurisdiction-specific reading. A spreadsheet recovery amount alone is not a complete accounting conclusion.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.