Financial Perspectives

Financial perspectives are used to define how the Graphene platform interprets individual transactions recorded in Graphene’s Ledger data structure. More information about the Ledger data structure can be found in the description of the Ledger Format.

Different industries (insurance, reinsurance, capital markets) and vendors often have widely different definitions of individual financial perspectives and in this section we try to account for a number of different scenarios.

Reinsurance Program

Consider the following business model / cashflow network that describes a simple reinsurance program from a reinsurer’s perspective:

digraph G { graph [ fontname="Courier", fontsize=12]; node [ shape=rect, fontname="Courier", fontcolor=blue, fontsize=10, margin=0.1]; edge [ fontname="Courier", fontcolor=blue, fontsize=8]; cedent [label="Insurer Loss", shape=note]; gross [ xlabel="GROSS\n(Insurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; layer1 [label="Reinsurance Program\nLayer 1"]; layer2 [label="Reinsurance Program\nLayer 2"]; layer3 [label="Reinsurance Program\nLayer 3"]; program [label="Reinsurance Program"]; net [ xlabel="NET\n(Reinsurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; premium_only [label="Filter\ntype:\l+ \"Premium\"\l+ \"ReinstatementPremium\"\l"]; brokerage_fees_only [label="Filter\ntype:\l- \"ReinstatementBrokerage\"\l- \"Tax\"\l- \"Fee\"\l- etc.\l"]; loss_only [label="Filter\ntype: \"Loss\""]; income [ xlabel="INCOME\n(Reinsurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; expenses [ xlabel="EXPENSES\n(Reinsurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; net_loss [ xlabel="GROSS\n(Reinsurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; negate [label="* -1", shape=circle]; combine [label="+", shape=circle] retained [ xlabel="RETAINED\n(Insurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; recoveries [ xlabel="RECOVERIES\n(Insurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; cedent -> gross; cedent -> layer1; cedent -> layer2; cedent -> layer3; program -> loss_only; loss_only -> net_loss; loss_only -> negate; cedent -> combine; negate -> combine; negate -> recoveries; combine -> retained; layer1 -> program; layer2 -> program; layer3 -> program; program -> net; program -> premium_only -> income; program -> brokerage_fees_only -> expenses; }

Perspective

Description

Sign

GROSS (Insurer)

The gross claims the insurer makes to the reinsurer.

Negative

NET (Reinsurer)

The net position of the reinsurer after paying claims, earning premium, and expenses.

Positive Income

Negative Expenses

INCOME (Reinsurer)

Income (e.g. Premium, Reinstatement Premium) earned by the reinsurer.

Positive

EXPENSES (Reinsurer)

Expenses excl. loss (e.g. Brokerage, Taxes, Fees, etc.) payed by the reinsurer.

Negative

GROSS (Reinsurer)

Gross losses assumed by the reinsurer.

Negative

RECOVERIES (Insurer)

Recoveries received from reinsurance claims by the insurer.

Positive

RETAINED (Insurer)

Net losses retained by the insurer (e.g. losses not covered by reinsurance).

Negative

Reinsurance Program with Inuring

Consider the following business model / cashflow network that describes a reinsurance program whose subject losses are first subject to an inuring program:

digraph G { graph [ fontname="Courier", fontsize=12]; node [ shape=rect, fontname="Courier", fontcolor=blue, fontsize=10, margin=0.1]; edge [ fontname="Courier", fontcolor=blue, fontsize=8]; cedent [label="Insurer Loss", shape=note]; gross [ xlabel="GROSS\n(Insurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; inuring1 [label="Inuring Program\nLayer 1"]; inuring2 [label="Inuring Program\nLayer 2"]; inuring [label="Inuring Program"]; inuring_loss_only [label="Filter\ntype: \"Loss\""]; inuring_negate [label="* -1", shape=circle]; inuring_recoveries [ xlabel="INURING BENEFITS\n(Insurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; gross_net_inuring [label="+", shape=circle]; layer1 [label="Reinsurance Program\nLayer 1"]; layer2 [label="Reinsurance Program\nLayer 2"]; layer3 [label="Reinsurance Program\nLayer 3"]; program [label="Reinsurance Program"]; net [ xlabel="NET\n(Reinsurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; premium_only [label="Filter\ntype:\l+ \"Premium\"\l+ \"ReinstatementPremium\"\l"]; brokerage_fees_only [label="Filter\ntype:\l- \"ReinstatementBrokerage\"\l- \"Tax\"\l- \"Fee\"\l- etc.\l"]; loss_only [label="Filter\ntype: \"Loss\""]; income [ xlabel="INCOME\n(Reinsurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; expenses [ xlabel="EXPENSES\n(Reinsurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; net_loss [ xlabel="GROSS\n(Reinsurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; negate [label="* -1", shape=circle]; combine [label="+", shape=circle] retained [ xlabel="RETAINED\n(Insurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; recoveries [ xlabel="RECOVERIES\n(Insurer)", label="", shape=circle, style=filled, color=red, width=0.2, ]; cedent -> gross; cedent -> inuring1; cedent -> inuring2; inuring1 -> inuring; inuring2 -> inuring; inuring -> inuring_loss_only -> inuring_negate; cedent -> gross_net_inuring; inuring_negate -> inuring_recoveries; inuring_negate -> gross_net_inuring; gross_net_inuring -> layer1; gross_net_inuring -> layer2; gross_net_inuring -> layer3; program -> loss_only; loss_only -> net_loss; loss_only -> negate; gross_net_inuring -> combine; negate -> combine; negate -> recoveries; combine -> retained; layer1 -> program; layer2 -> program; layer3 -> program; program -> net; program -> premium_only -> income; program -> brokerage_fees_only -> expenses; }

Perspective

Description

Sign

GROSS (Insurer)

The gross claims the insurer makes to the reinsurer.

Negative

NET (Reinsurer)

The net position of the reinsurer after paying claims, earning premium, and expenses.

Positive Income

Negative Expenses

INCOME (Reinsurer)

Income (e.g. Premium, Reinstatement Premium) earned by the reinsurer.

Positive

EXPENSES (Reinsurer)

Expenses excl. loss (e.g. Brokerage, Taxes, Fees, etc.) payed by the reinsurer.

Negative

GROSS (Reinsurer)

Gross losses assumed by the reinsurer.

Negative

RECOVERIES (Insurer)

Recoveries received from reinsurance claims by the insurer.

Positive

RETAINED (Insurer)

Net losses retained by the insurer (e.g. losses not covered by reinsurance).

Negative