Modified SAP definition
Modified SAP means SAP as applied in the preparation of Positive’s NAIC annual statements with the following adjustments:
1. The Base Fee, which is paid as a percentage of gross written premium at the time of premium payment, will be recorded as an expense ratably as the premium is earned. The premium is earned using SAP over the policy “in force” period. The initial non-expensed management fee is recorded as a deferred asset on the Positive balance sheet and is amortized against earned premium. For avoidance of doubt, for purposes of calculation of the combined ratio, such fee’s contribution to the combined ratio shall be calculated with respect to net earned premium.
2. Commissions paid to agents and brokers, which are paid as a percentage of gross written premium at the time of premium payment, will be recorded as an expense ratably as the premium is earned. The premium is earned using SAP over the policy “in force” period. The initial non-expensed commission is recorded as deferred acquisition cost on the Positive balance sheet and is amortized against earned premium. For avoidance of doubt, for purposes of calculation of the combined ratio, such fee’s contribution to the combined ratio shall be calculated with respect to net earned premium.
3. Premium Taxes paid at the time of the issuance of the insurance policy will be recorded as an expense ratably as the premium is earned. The premium is earned using SAP over the policy “in force” period. The initial non-expensed premium tax is recorded as a deferred tax asset on the Positive balance sheet and is amortized against earned premium. For avoidance of doubt, for purposes of calculation of the combined ratio, such fee’s contribution to the combined ratio shall be calculated with respect to net earned premium.
4. With respect to expenses directly incurred with respect to the current ongoing audit by the Pennsylvania Insurance Department (conducted generally every 5 years and expected to end in early 2019), 60% of such expenses shall be allocated in 2018 and 40% in 2019. With respect to expected expenses directly associated with future audits by the Pennsylvania Insurance Department, such expected expenses shall be accrued as an expense ratably over a 5 year period.
Modified SAP means SAP as applied in the preparation of Positive’s NAIC annual statements with the following adjustments:
1. The Base Fee, which is paid as a percentage of gross written premium at the time of premium payment, will be recorded as an expense ratably as the premium is earned. The premium is earned using SAP over the policy “in force” period. The initial non-expensed management fee is recorded as a deferred asset on the Positive balance sheet and is amortized against earned premium.
2. Commissions paid to agents and brokers, which are paid as a percentage of gross written premium at the time of premium payment, will be recorded as an expense ratably as the premium is earned. The premium is earned using SAP over the policy “in force” period. The initial non-expensed commission is recorded as deferred acquisition cost on the Positive balance sheet and is amortized against earned premium.
3. Premium Taxes paid at the time of the issuance of the insurance policy will be recorded as an expense ratably as the premium is earned. The premium is earned using SAP over the policy “in force” period. The initial non-expensed premium tax is recorded as a deferred tax asset on the Positive balance sheet and is amortized against earned premium.
Examples of Modified SAP in a sentence
Within ten (10) days of the completion of Positive’s annual audited statutory financial statements, the parties shall calculate the components of the Performance Fee for the preceding year and shall determine the Performance Fee utilizing the information in such audit report (with appropriate modifications under Modified SAP).
Such Fee shall be paid quarterly as described in Section 4(d) below according to the following formula: *CR = Positive’s combined ratio (to be calculated in accordance with SAP as adjusted as described in the definition of Modified SAP) for the relevant period prior to paying the Performance Fee.