1. Why do you think it is important for a reinsurance transaction to transfer risk in order for a company to obtain the benefits of reinsurance accounting? Discuss the accounting and legal issues behind such a requirement.
2. Assume the external auditors of Zurich Re and Converium knew about the Inter-Ocean and the Z-1 Facility transactions. What legal issues could have been raised by the purchasers of stock in Converium’s IPO to successfully bring an action against the auditors?
3. Evaluate the ethics of Zurich Re’s actions with respect to its reinsurance transactions and the transfer of economic risk.