Fall2012-Q29 a)

oxalisoxalis
in CIA.FCT

Hi Graham,

Is the answer provided in the exam report still valid?

To me none of the company is satisfactory based on FCT criteria:

  • under base scenario, insurer meets internal capital target
  • under going concern scenario, insurer meets regulatory minimum capital requirement (100%)
  • under solvency scenario, assets - liability >0

Comments

  • grahamgraham
    edited October 2021

    Unfortunately you can't really tell. It's hard to redo the old DCAT problems using the new FCT criteria because the some of the information you need is different. For example, this exam problem:

    • does not tell you the internal capital target for this insurer
    • provides 3 "plausible adverse scenarios" which would be called "solvency scenarios", but does not provide a going-concern scenario
    • uses different thresholds and different time horizons

    It's helpful to look at the old DCAT problems just to see how these types of questions were presented in the past but don't spend much time trying to apply the FCT criteria to solve them because you sometimes (often?) won't be able to. I've provided several practice problems in the wiki article and you would gain more by focusing on those.

  • oxalisoxalis

    Thank you!!

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