10 Accounting & Financial Reporting Example 1 – Accounting for Premiums & Losses Fronting Company AMIC Insured $100,000 in premiums ($25,000 earned per quarter) $95,000 ($23,750 per quarter sent to the captive) Loss Runs / Cession Statement: $5,000 Paid + $10,000 Reserved = $15,000 Incurred Invoices: $30,000 Expenses Actuarial Report: $25,000 Ultimate Losses - $15,000 Reported = $10,000 IBNR (Incurred But Not Reported) $5,000 for Fronting Fees ($1,250 expensed per quarter)
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