Accounting and Tax Specifics of the Reinsurance of Commercial Insurance Companies

The relation between an insurance company and a reinsurance company is a contractual relation between two independent entities. A ceding of risk exists from the insurer to the reinsurer at precisely ahead defined contractual conditions. Commercial insurance companies can increase their insurance capacity through reinsurance. They share risks and also profit and income from business with the reinsuring insurers, respectively reinsurers. The accounting of reinsurance operations is very specific part of accounting in commercial insurance companies. The aim of the paper is to analyse accounting and tax specifics of the reinsurance in commercial insurance companies, in accordance with the relevant accounting legislation. The reinsurance operations affect the profit of a commercial insurance company, following the financial statements. The partial aim of the paper is to analyse the Czech accounting legislation for reinsurance operations in commercial insurance companies. Attention will be paid also to the method of accounting for reinsurance operations and their specific reporting in various parts of the financial statements of commercial insurance companies.