Staff-T1
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No, future acquisition costs should be discounted (refer to the master formula in the LRC sample Excel from the CAS) That said, in this question specifically they probably just assume that it is all incurred in day one since there is no discount fac…
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Mainly because the PAA is a simplification, so no need for all those intricacies.
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Yup I agree - We should sum both columns (72) and (74) @graham . Technically, the correct definition is not that the LIC/AIC both uses the GMA approach, it is that LIC/AIC is the same under PAA and GMA. The reason it is split out is for presentation…
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Yes I believe that is an old reading which was removed from the syllabus * What do you mean by 'start'? Groups cannot start -> Policies in a group can begin to provide coverage. * No they mean the coverage length difference is only 6 months…
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Oh, taking a closer look yes you are right - Because of IFRS17 this has changed. In fact most of the MCT formulas have changed. This question is no longer relevant anymore, but in the actual exam they will probably just give you the premiums receiva…
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The 100k limit was established as a baseline in Fenn vs Peterborough, but was only formalized into a rule of law in Neuzen vs Korn. Given that this case was before Neuzen vs Torn, it was not a rule of law yet
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With a 100K cap, the amounts can never be greater than that, even if the juries are of the impression that compensation should be greater
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I believe so, but it is not explicitly mentioned in the MCT paper
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We can probably make a few quick notes for the next sitting @graham
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Yeah looks like there is a typo on the CAS' end. Your groupings are fine
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Yes, the formula is correct. That would reflect net written premium since there are no assumed premiums. No, the formula has not changed
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Yes, thanks - fixed the typo
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If you add your RA to the FCF, then it's no longer the expected value. It's some amount E(X) + y which means you can't solve for mu anymore using the provided formula should you do that. Remember, the expected value is your BEL. You add the RA to…
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Yes. But also note the difference between groups in which future acquisition costs are considered and those where they are not. Future acquisition costs for the FCF are only considered for those policies where coverage has not yet been provided
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Provision for credit losses should always be subtracted from Net income in the financial industry in general. It's probably cause it is shown as a negative amount in the FS, so you add it. I think just remember that it should reduce net income and y…
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You have an expected amount of policies that will cancel that are currently in force and have a UEP component. Without accounting for that, you are understating the amount of premiums receivable
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Let's trace the tree diagram: 1) When did the actuary become aware of the event? After the calculation date but before the report date 2) Does the event reveal a data defect or calculation error? No 3) When did the event occur? After the calculat…
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Yes, you are correct. It would be the former
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Her condition continued to deteriorate from 2010 to 2015. I would assume she brought this up to Economical who had to then reclassify the injury to catastrophic
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The divisional court ruling
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Yes, so this is tricky - This is largely consistent with the sample GMA calculation provided by the CAS where DAC is also not included (Beyond the same adjustment we see here) so I do not think this is a mistake. In my mind, I would also include the…
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It's a trick question - The length of the forecast period is 3 years. The insurer only fails the going concern and solvency scenarios in years 4 and after, which means they meet the requirements during the forecast period
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Yes that's right
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Risk transfer test would be on the Frei paper - I think if you read that it provides a good description of what a risk transfer test is
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Yeap
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I wouldn't worry too much about what exactly is in the DAC for the exam -> Just knowing it is there is sufficient
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Yeap that is correct
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It will reduce the CSM. For reinsurance held, a negative CSM means expected profit on the policy while a positive CSM represents a net cost of reinsurance
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No, I think it would be possible. Examples would be significant variability from uneven premium earnings pattern (catastrophic reinsurance) during periods of low interest rates. As an extreme example, if interest rates are 0 and the only source of v…
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This refers to the risk adjustment for financial risk that is included in the estimate of the FCFs