GIM8330 - Reinsurance and other forms of risk transfer: financial reinsurance and alternative risk transfer (ART): tax treatment: fronting
Where a UK company is fronting (GIM8160) for offshore reinsurers in relation to financial insurance arrangements, the accounting treatment adopted by the UK company will normally make little difference to its reported profit.
Provided the treatment is applied consistently and even-handedly to both sides of the transaction it should not be regarded as a risk.