| 1. | The Appointed Actuary of an Insurance Company shall submit a Reinsurance report to the Company’s Senior Management, Board of Directors and SAMA. The report shall be submitted in a form and at dates to be prescribed by SAMA’s instructions
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| 2. | This report shall assess the appropriateness of Reinsurance arrangements and risk Retention levels for each line of business having regard to the Company’s risk appetite, capital adequacy and the total exposure currently underwritten and expected to be underwritten in the following financial year and provide observations on risk Retention levels, considering:
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| | a. | Profit sharing mechanisms or variable commissions.
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| | b. | Loss sharing mechanisms.
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| | c. | Any caps on the Reinsurance Companies’ total exposure under Reinsurance treaties.
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| | d. | Any caps on the Reinsurance Companies’ exposure to single events, incidents or claims.
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| | e. | Any swing rates where Reinsurance premiums are adjusted based on the results of the Reinsurance.
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| | f. | The possible impacts of reinstatements or aggregate deductibles on excess of loss treaties.
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| | g. | How Reinsurance arrangements are expected to operate under stress scenarios.
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| 3. | The Appointed Actuary shall review and comment on the effectiveness of the Company’s procedures to assess whether or not any Reinsurance contracts transfer significant Insurance risk to the Reinsurance Company, particularly in conjunction with any side letters or other arrangements, and report accordingly.
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