4.4 Legal risk - Scor

APPENDIX C: GLOSSARY*
*This glossary is a list of selected reinsurance terms. It is not a complete list of terms used in this Document de
Reference or in the insurance or reinsurance industry.
A
ACCIDENT YEAR
The accounting year in which loss events occur.
ACCOUNTING YEAR
The entity’s financial year in which the accounts are recorded. Due to the time required to transfer information elating to
a given period of cover, the ceding company’s accounting year may differ from that of the reinsurer. For reinsurers such
as SCOR and its subsidiaries, which may calculate their results before receiving the accounts from the ceding company,
estimates are made for ceding company information which has not been received at the date the financial statements
are prepared.
ACCUMULATION
The sum of all risks which are correlated such that a single insured event will affect these risks or all the underwritten
lines relating to the same risk.
ACTUARY
Specialist who applies probability theory to Life and Non-Life insurance and reinsurance in order to measure risks and
calculate premiums, as well as technical or mathematical reserves.
ADDITIONAL RESERVE
Reserves for claims are recorded in the accounting system for the amount communicated by the cedants. They can be
supplemented with additional amounts calculated according to past experience, in order to take into considerations
estimated future adverse developments.
ADVERSE DEVELOPMENT
Losses recorded during the period for which initial estimates recorded in previous accounting periods proved
insufficient.
ASSUMED BUSINESS
Transaction whereby a reinsurer agrees to cover part of a risk already underwritten or accepted by an insurer. The
opposite of ceded business.
ATTACHMENT POINT
The amount of losses above which an excess of loss reinsurance contract becomes operative.
B
BEST ESTIMATES
An actuarial “best estimate" refers to the expected value of future potential cash-flows (probability weighted average of
distributional outcomes) related to prior underwritten business. Best estimates are based upon available current and
reliable information and take into consideration the characteristics of the underlying portfolio.
C
CAPITAL (ADEQUACY)
Amount of capital relative to a financial institution's loans and other assets. Insurance regulators require that insurers
hold a certain minimum of equity capital against their risk-weighted assets.
CAPITAL (BUFFER)
The amount of capital needed in order to protect the required capital, so that it (the required capital) cannot be eroded
with a probability higher than 3%.
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