CAS Exam 6C Spring 2014, Question 29
Study guide: Exam 6C
Various mechanisms are available to a reinsurer to transfer insurance obligations to another entity. Two of these options are commutation and novation.
Part a (0.75 points)
Define "commutation" and describe the impact on the balance sheets of the two entities involved in this type of transaction.
Part b (0.75 points)
Define "novation" and describe the impact on the balance sheets of the two entities involved in this type of transaction.
Answer this question and see the worked solution