This article considers some of the accounting and financial issues that arise out of ART transactions and claims.
The transfer of risk to capital markets and the integration of reinsurance, banking and providers of capital are well known in the ART world. The complexities of accounting and finance in this area are, perhaps, less well understood. ART transactions are inevitably complex and involve many parties. As each transaction is often unique, it may require expertise in insurance, reinsurance, actuarial science, taxation, legal, accounting, investment banking and asset management.
Complexities
There are fundamental differences between transactions involving traditional insurance/reinsurance and financial products and those arising from ART. Part of the difference in approach is the way banks and financial institutions do business, compared to insurance companies dealing with a traditional claim. The banks frequently require payments promptly, as they are counterparties to a
