Staff-T1
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If you have a decrease in liabilities, you are not writing a lot of premium which means it is more difficult to replenish your surplus
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I don't really agree with the posts above. My interpretation which is aligned with Francois is that the premium for losses in the layer 0-80% is covered by the government at 60%, premium in the layer 80-93% is covered by the government at 33% and th…
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yeah I think so
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This is how agriculture insurance is done in Canada -> We always rely on past historical losses. We don't usually think how it would be done otherwise as agriculture insurance guidelines comes from the crown corps (MASC, Agricorp etc.)
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1) It is referring to actuarial costs. If you employ risk mitigation techniques, i.e. flood proofing your home, then the severity of a loss is reduced 2) A government backstop would mean that they are guaranteeing to cover all losses, beyond those …
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Conclusion seems similar to me
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The FCF is 1500. Not sure why you are implying it would be 5000
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CSM is a negative liability, so essentially an asset, but still a liability nonetheless. For part (b) LRC = FCF iff measurement is done using the GMM. Under PAA, it is not necessarily true that the LRC excl LC is equal to the FCF (It is usually hig…
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* Just do LRC = UEP - DAC. So at the end of year 2 it would be 600 (UEP) - Remaining DAC(200) = 400 * Incurred claims does not affect the LRC, only the LIC
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* There are a couple of posts on this. This is because the CAS is inconsistent and defines FCF as both inflow - outflow, or outflow - inflow in different papers. I generally prefer the definition of outflow - inflow as that is more consistent with h…
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I explained above
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The only thing that you get from the material is that FARM participation ratio varies by class of business and jurisdiction. It doesn't go into further detail, which means you don't have to worry about it for the exam
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Yes, although I can't think of any examples off the top of my head and neither does the source go into any additional detail on it. I think the difference in contract boundary and term of contract would be easier with the following example: A 1 ye…
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Staggered payments are quite common in the industry. For example, you would usually pay your premium monthly for an annual policy
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They are not assuming that investment income = net investment income. If you look at the formula, they are backing out investment income from net investment income by removing capital gains
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* Yes * It depends on the formula used? For this question, they explicitly split out realized gains so it's quite obvious they want you to do something with it. I get that you'd like to have standardized notation but there is no one sized shoe that…
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You cant really do the question without assuming that investment income = net investment income here 1. Yes capital gains = unrealized gains + realized gains 2. Yes
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* That's right * As Graham mentioned, you just have to use the MSA formula for an MSA question and a CCIR formula for a CCIR problem. They are just different. I do not know if MSA has an error or not. Given how long it has been in the syllabus, I w…
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You are taking net CAE for FY2017. The ceded amounts are already implicit in it
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Unearned premium recoverable is the portion of reinsurance premium that hasn't been earned yet (i.e. if you bought coverage for a year but are only 6 months into the term, then 50% of the premium is recoverable) You'd need to subtract it from the…
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When utilising an EQ model, the output that is usually desired would be the tail losses (i.e. the 1in 200, 1in 500, 1 in 1000 year events, etc.) These losses are very large and particularly sensitive to changes in assumptions/model inaccuracies/defe…
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Yeah you do - It will come naturally as you go through the material more often over the next few weeks
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yeap
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Generally, indirect acquisition costs are expensed when incurred and are not part of the FCF
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Commisions are usually a separate expense paid to third-party agents, brokers, or intermediaries for their services in selling or renewing insurance contracts. These payments are typically contingent on the sale or renewal of a policy, and the amoun…
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They are the same thing