Staff-T1
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The unearned premium that is used to derive the future acquisition cost is already "discounted". The whole point of discounting the premiums is to bring all the future premium inflows to time 0. In the case of the unearned premium, they are all alre…
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For Q8: Yes that is right, we want to group into as few groups as possible, whenever we can. For Q12: Measurement model is THE most important consideration for making groupings - period. You cannot a group of contracts measured under GMM and anoth…
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I think either would be accepted given that it is vague as you mentioned but thanks for pointing it out!
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It doesn't matter. You can discount at year end or mid year if the question doesn't say specifically. However, if it's stated in the question that capital is released in the middle of the year or end of the year, then you'd have to discount accordin…
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The BattleActs solution is the most correct version. I do not think the CAS method reconciles with what is in the CIA paper, in the sense that their LRC is not equal to 0 when all coverage has been provided which should not be the case. If you chang…
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What are you referring to by time periods?
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The grid premium is kept by the insurer not the government. It's just meant to limit how much premium they can charge
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Hmm I'm not sure cause it's not in the syllabus - I think you'd probably be better off focusing on what's in it given the exam date proximity
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The CAS solution is correct. An internal capital target is meant to reflect how much economic capital a firm needs to run. There is risk from a loss of value due to rising interest rates reducing the PV of bond cash flows. And no a govt bond isn't c…
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For number 2) it's not saying that it's zero, just that the indemnity should be capped at the original trilogy limit which is 100k
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The LRC is one component of the ISR, but the ISR has other components also as shown above. The loss that determines the loss component is not the accounting loss which you are referring to here
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Alberta uses prior approval for their auto program. At any point in time, insurers have to charge min(insurer premiums, grid premiums) and the grid premium is determined by the AIRB which is the government's insurance regulator. Max cap is based on …
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The CAS examiner reports are meant to be a sample list of answers that obtained full marks. It is never a comprehensive list of every acceptable answer
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I basically need 2*MCR which is the operating target. You are given 1.5MCR. Dividing by 1.5 gives you MCR, then multiply it by 2 to get 2MCR. The bonus question uses 1.5MCR as the target ratio. This question specifically says they would like to u…
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The two different methods to unwind using spot rates are explained in section 10.2 rows 7 and 9 of the source material. No, the solution is basically showing the difference in PV of the liabilities evaluated at the end of 2024 vs beginning of 2024…
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Sample 18: 0.333 is just the average accident date adjustment for premium liabilities/LRC. There is a derivation for this in one of the old premium liability papers under IFRS4 using some integration, but you just need to know the output. Sample 2…
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I think that's a fair point. That said, it's just meant to be an example of how the calculation will be done. I don't think the CAS will test to this level of detail (i.e. penalizing a candidate for subtracting D given that it's not from a foreign b…
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Yes that's correct. Macaulay duration approximates the % change in CF and by extension so does Macaulay duration. The 1+ i is just an extension to it.
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You divide by 1.5 to go from the supervisory capital required (150%) to the MCR (100%). You then multiply by 2 to get to the target 200% MCT ratio for the operating target
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No, your first formula is the most correct method. In most cases, the latter method refers to a policy after initial recognition but before the effective date, so there would not be any premiums receivable
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The battle card is saying modified duration approximates the % change in PV of Cash Flows. Where does it talk about the 1+i factor and how that specifically represents the 100 bps change in interest rates?
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I don't think this would be acceptable. You can't discount like this to calculate the cumulative excess. The discount method referred to in this section is how you would evaluate your unpaid in runoff
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Yes, LIC is just PV(FCF). LIC is the same regardless of whether you use PAA or GMA
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yeah - that's the only way provinces can raise money
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The original claim amount is 300k - 250k - 25k = 25k short
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Technically no, but its still in the syllabus since this is a pre-ifrs17 paper
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The reinsurer will use a discount rate to price their product to get the PV of cash flows. That discount rate used reflects their own pricing strategy, so we shouldn't take that into account when we are analysing risk transfer
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When you do a cost of capital calculation you always need a ROE number - You're just replacing ROE with profit margin here
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No, this is correct if you check on page 70.50. Its an asset cause you've already prepaid the reinsurance premium, its only being recognized now
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You could use middle of year also