Change in U.S. Accounting Rules Seen Benefiting Reinsurers.OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 3, 1999-- Life reinsurers worldwide are expected to benefit from an impending im·pend intr.v. im·pend·ed, im·pend·ing, im·pends 1. To be about to occur: Her retirement is impending. 2. change in U.S. accounting rules, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. an article in Best's Review's reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. supplement. The change -- called the Valuation of Life Insurance Model Regulation, but more commonly known as "Triple X" -- is designed to ensure that direct insurers set aside enough reserves to cover claims on life insurance policies. It is most likely to affect the increasingly popular 20- and 30-year level-premium term life policies. Level-premium policies lock in premium rates for extended periods. Triple X, which will take effect state by state over the next year, is bringing direct writers to reinsurers for advice on new products and money to meet the new capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Under the new rules, insurers will be able to set prices based on their best estimates of future mortality. Previously, companies did not have any leeway in how much reserve they posted. At the same time, Triple X will increase the insurers' reserving requirements, sometimes by multiples. As a result, Best's Review says, insurers will need to invest more capital in the business. In a recent survey of 300 insurers, 60% to 70% said they expected reinsurers to provide the "magic answer" to Triple X. "A lot of people expect reinsurers to reinsure re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. their Triple X woes away," David Atkinson For the Canadian academic, see . David Atkinson (born 24 March 1940) was Conservative British Member of Parliament for Bournemouth East from a 1977 by-election until he stepped down at the 2005 general election. , president and chief executive officer of RGA RGA Reinsurance Group of America RGA Return Goods Authorization RGA Republican Governors Association RGA Residual Gas Analyzer RGA Royal Garrison Artillery RGA Restricted Growth Association (UK) RGA Rate Gyro Assembly Reinsurance Co. told Best's Review. "We're redeveloping products so they'll be ready to hit the street on Jan. 1 -- priced properly." In response to the new rule, ING Reinsurance has assembled a task force to help direct writers minimize their premium increases by giving their valuation actuaries the data they need to set pricing assumptions. The Best's Review article -- titled "Determining the Value of X" -- can be read on the Internet at www.bestreview.com/sup/index.html. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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