Self - sustainability

pass23pass23
in Chev.Agric

Hi, just a clarification on this question,

Question 1: how is self-sustainability defined?

Conceptual defn: RECOVER from severe loss scenarios WITHIN a reasonable time
Statistical defn: FOR ALL (base, adverse) scenarios with INITIAL DEFICIT = 6th yr, 95th percentile: MUST RECOVER DEFICIT IN (15yrs on avg AND 25yrs with 80% probability)

Does this mean that there is 15 years additional after the 6 years or there is 9 years after the fund loss?

Comments

  • Staff-T1Staff-T1

    At the end of the 6th year of projection, the insurer should the deficit on within 15 years on average, and have an 80% chance to recover within 25 years.
    Yes, it would be 15 years AFTER the 6th year has passed so 21 years in total for criteria 1

  • CanAct06CanAct06

    So it says the 'fund balance at 95% percentile' is your initial deficit?

    what exactly is the fund balance comprised of?
    So you are saying, "in the event that this 'fund balance' at 95%'le 6th is our initial deficit, will we recoup deficit within 15 year at 80% or 25 year guaranteed"??

  • grahamgraham

    Apologies for the delay in answering. We are looking into this.

  • Staff-TSStaff-TS
    edited April 18

    The fund would be comprised of money coming from producers, the provincial government, and the federal government.

    Not quite.

    For all base & adverse scenarios:

    • calculate the 95th percentile of the fund balance at the end of the 6th year
    • rerun the scenario with that starting point
    • then the program is self-sustainable IF deficit recovery occurs
      → within 15 years on average, and
      → within 25 years with 80% probability
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