Staff-T1
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You can be onerous, but if your PAA excl LC is greater than your GMM estimate, then you can continue booking the PAA excl LC estimate of your LRC. It's not profitable, but you can still use your PAA estimate
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I prefer to use point value to gauge how long my responses should be. So a briefly describe with 0.25 points would be extremely short and to the point
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Where does it say it has to be the same % for both products? Could you provide a reference? I'm not aware to my knowledge of this requirement
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CSM has the same sign as the FCF. They do not really offset each other. LRC = FCF + CSM. The CSM is the unearned profit at inception, amortised throughout the life of the policy and not the premium
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FCF is not just the expected loss, but the expected loss less premiums. Basically the LRC is sort of a replacement for premium liabilities under IFRS4
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Graham alluded to the following question to justify capping after making deductions. https://www.battleactsmain.ca/pdf/Exam_(2015_1-Spring)/(2015_1-Spring)_(23).pdf It is hard to tell if the examiner's report is wrong given that OSFI doesn't provid…
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No, you are right - I forgot that the ERC has financial resources which includes capital available as one of the components
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Did you read section 5.6.1 as I mentioned above? Basically the financing component affects the price of the policy and it should be reflected as such * Yeap * Yeap
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Why would you need Capital available to calculate the earthquake reserves tho?
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oh yeah you are right. PAA Excl LRC + LC = FCF. Somehow I was thinking about the GMA when I typed that out. LRC = 10
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yeah IBC sells the mandatory coverages. Insurers are free to sell add-ons. I think it is probably a typo in the solution
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Yeah, any acquisition cash flows go directly into P&L
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So this graph is basically LRC at inception AFTER the first premium has been received. LRC is defined as FCF + CSM. You would just not add the LC to your LRC. When you have a LC, your LRC is just equal to FCF since your CSM is 0
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Yeah and yeah it is a typo for your second point
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1) I believe there was no going concern scenarios under the DCAT. This is an old question 2) They could be non-zero. How does it affect the question? They will not change due to a decline in the stock portfolio
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Yeah 13 is not applicable
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Basically the rough equivalent would be: 1. Asset for remaining coverage 2. Asset for incurred claims
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Yup you are right with your analogy. I think it is fine to do either mid-year or year end discounting if it is not mentioned. Just state your assumptions
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The definition of unearned premium is premiums received less earned premium. Your PAA formula would be = Premiums received - earned premium - premiums received - DAC = - earned premium - DAC which doesnt make sense
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* This is the LRC immediately after the first premium has been received. Once that happens the LRC becomes non-zero. That's my take on this. Otherwise, the estimates will all be zero for PAA and GMA for non-onerous contracts which would defeat the w…
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I mean it depends - If you are doing a full filing and would like to make a territorial rate change with an overall rate change, that would be fine
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Yes that is right. Again it is about conservatism. You are non-onerous in option (b), but you are actually carrying more liability or 'reserves' than in option (a) so that is fine. Remember PAA is meant to be a simplification of the GMM. Also, your …
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There is a difference between government and regulator, yes. A regulator is someone like FSRA or AIRB. They are not the government. Governments only set rates in places like Manitoba through MPI or BC through IBC. They're not involved in rate settin…
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There's two FCFs. FCF = Future cash flow or also fulfillment cash flow. Fulfillment cash flows are the ones that have discounting and RA
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I do not agree with the wiki. The order is not stated explicitly by OSFI and the best reference is the order of instructions in the memo from OSFI. I'll discuss with Graham
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I do not think the statement from carrots1 is correct. For the first statement, (A+B+C+D) represents the expected recoverables, but E+F +G + H + I is more of the collateral backing the recoverables. If the collateral is less than the expected rec…
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MCT is just current year and yes to your FCT statement
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In theory yes, but I don't think it will be asked, no. It's actually not too hard, you always release CSM and LC according to a pre-determined pattern (usually premium earning pattern) and then just accrete interest
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Imo I think the battlecard does not contradict the paper tbh. It is implicit in the battle card that coverage is guaranteed by the FA and will be available to all vehicle owners who needs it. I do think the examiner's report is probably alluding to …
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I think APV factor here should be fulfillment cash flows/ future cash flow. For PV factor, (Fulfillment cash flow - RA)/future cash flow