Category: Reinsurance fundamentals · Reviewed by Jake Leat, Associate Director · Last reviewed 2026-06-05
Calendar year reinsurance allocates premium and claims by reference to the calendar year (or other accounting period) in which they are earned or incurred, rather than by reference to the underwriting year of the underlying contract. It is the basis used by company market reinsurers reporting under IFRS 17 and is contrasted with the underwriting year basis used historically at Lloyd’s.
Category: Reinsurance fundamentals Also known as: annual accounting basis, calendar year basis Related concepts: underwriting year, risk attaching basis, loss occurring basis
Calendar year reinsurance recognises earned premium and incurred losses in the accounting period in which they are earned or incurred, with appropriate reserves (unearned premium reserve, outstanding loss reserve, IBNR) brought forward and carried forward between periods. The 2024 calendar year result, for example, comprises premiums earned during 2024 (whether under 2024 or earlier underwriting year policies) and losses incurred (paid or reserved) during 2024.
Calendar year accounting is the standard basis under IFRS 17 and FRS 103 for company market insurers and reinsurers. It is consistent with the general principles of accruals accounting and produces a result for each calendar period regardless of the timing of underwriting and the run-off of long-tail liabilities.
Under IFRS 17 the General Measurement Model (or, where appropriate, the Premium Allocation Approach) requires insurance and reinsurance contracts to be measured at the present value of future cash flows plus a risk adjustment, with the contractual service margin released over the coverage period. The income statement presentation is on a calendar year basis with insurance revenue, insurance service expense and net financial result reported separately.
For Solvency II, technical provisions are calculated on a best-estimate basis with a risk margin, with cash flows allocated to the period in which they are expected to arise.
Most reinsurance treaties written by company market reinsurers (Munich Re, Swiss Re, Hannover Re, SCOR) are reported on a calendar year basis. The cedant’s accounting team prepares treaty statements on a calendar year basis, with appropriate allocation of unearned premium and IBNR reserves at period end.
The contrast between calendar year and underwriting year is most acute where the underlying business is long-tail and where reinsurance is purchased on a loss occurring basis: a 2024 calendar year XL treaty responds to losses occurring during 2024, irrespective of the inception year of the underlying policy. A 2024 risk attaching treaty responds only to losses on policies incepting during 2024.
An illustrative example: a UK casualty insurer writes a 12-month employers’ liability policy incepting 1 April 2024. Under calendar year accounting, the premium is earned pro rata between 1 April 2024 and 31 March 2025, with appropriate proportions reported in the 2024 and 2025 calendar year results. A loss occurring during 2025 is reported in the 2025 calendar year, regardless of the inception date of the policy.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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