Schedule F (ceded reinsurance, United States)

A US insurer that cedes USD 2 billion of risks to a European reinsurer not licensed in its state cannot deduct the ceded reserves from its liabilities without collateral. That is the purpose of Schedule F, the schedule of the annual statement that every insurer files with state insurance commissioners in the NAIC format. It lists each reinsurer to which the insurer has ceded risks: premiums ceded, losses paid and in reserve, recoverables, amounts overdue by more than ninety days, collateral held in the form of letters of credit, trust funds or deposits. From it, a provision for reinsurance is derived, an additional liability that penalizes recoverables from unauthorized or uncertified reinsurers that have not posted collateral, and from those whose payments drag. The aim is to make the insurer pay, through a setback in its statutory capital, for the credit risk of uncollateralized cessions. The system pushes foreign reinsurers to provide collateral: trust (Regulation 114), letter of credit, or certified or reciprocal jurisdiction reinsurer status, under the 2017 US-EU bilateral agreement. Analysts read Schedule F to spot concentrations of recoverables on a few reinsurers, settlement delays and an insurer's dependence on reinsurance.