Staff-T1
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Please refer to the following discussion: https://battleactsmain.ca/vanillaforum/discussion/comment/3765#Comment_3765
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Differentials are always assessed after off-balancing so it is implicit above that the magnitude is referring to a post off-balanced differential
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Paragraph 55 of the standard states that PAA LRC = UEP - DAC so Im pretty sure the source is wrong
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That's interesting - This is in contradiction to the sample excel. Also, when we calculate PAA LRC for actual financial reporting in the industry it is UEP - DAC. The source is probably wrong here ~
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It is 2 Cats tested as Graham alluded to above and the stressed BCAR score measures BS strength after the second cat event. The wiki is pretty clear on this
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I would prefer that to say that the RA is now meant to reflect an entity's own view of the compensation required to bear bespoke risk
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Well when you reduce your DAC, your LRC = UEP - DAC, will increase since you have decreased your DAC
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Have you tried discounting at the beginning of the period, middle of the period and end of the period?
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Decreasing the LRC is not a loss -> It is a gain as your liabilities have decreased, which is then offset by an equal amount of expenses, which means your net loss in every period is 0, except at time 0 when you booked your LC
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PAA LRC = UEP - DAC. There is no other definition
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No, the LIC = FCF since there is no CSM. So yes, the LIC would have discounting and RA
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What you have above is an explanation of what you have in the screenshot. I prefer the above as it is easier to remember
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It says in the example that they are not onerous so why do we need to assess if there is a LC?
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I'll answer it here: https://battleactsmain.ca/vanillaforum/discussion/1354/mini-battlequiz-3#latest
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The battlecard should say that LRC = UEP - DAC and is only valid for PAA. The Battlecard is not correct @graham
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You pay 25% of claims in the period 12-24. However, there are only 70% of claims remaining at the end of month 12. This means that the proportion of the remaining claims that you have to pay is 0.25/0/7 as 30% of the claims have already been paid. …
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Because this is an expense which reduces profit - Why do you think it should not reduce CSM?
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* This is because the RA is meant to reflect the difference in capital position before and after reinsurance for the ARC. With reinsurance, your capital position would be lower after reinsurance, which is a net benefit. Thus, the RA will increase th…
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Other revenues and expenses could include income from subsidiaries, but it also includes many other things. You could include it for the exam, but you would need to explicitly state your assumption
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* I am actually not sure what you would like me to expand on - Those are pretty clear cut reasons. Have you gone through the paper? * That's right * It means that the insurer does not have a fiduciary duty towards the insured as this would mean al…
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Under IFRS17, the concept of a DPAC doesn't exist and amortization of deferred acquisition costs are considered implicitly in the LRC through the CSM for the GMM and directly for the PAA. Your liability and equity will change in offsetting amounts w…
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Prescribed payment patterns means the payment pattern has been set in advance -> The implicit assumption above is that no payment patterns have been set in advance which means timing risk is still present
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The reinsurer only takes the layer 2M XS of 1M. 2M + 1M = 3M. You would then consider the aggregate deductible and limit
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The source mostly refers to major filings so that's probably why
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* It is the liability illiquidity premium * Yes - You can refer to section 4.5 of the source for more details on this
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Bond values have market risk though - When the financial position of a company deteriorates and causes yields on their bonds to rise; this decreases the value of bespoke bonds
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reinsurance contract asset is simply the expected recoveries from the reinsurer such as losses and commissions, while the reinsurance contract liability is the amount of payables owed to the reinsurer. The RA increases the ARC. For example, let's…
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It is -> But you can choose to amortize it rather than expensing it up front to spread the costs. It's an accounting rule
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For the purpose of this exam, I do not think you will need to know that
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Yes less rigorous means less strict. If your materiality standard is 2000 vs 1000, then you are less rigorous. This means that you have a higher standard of materiality