Staff-T1
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Yes Q4 refers to cumulative capital deployed
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Yes, unless they specifically call it out in the question or give you a discounting pattern for the FAC
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So this one is interesting - The problem is that when you look at the MCT instructions 4.3.3.2, they are not looking for the LRC, but several components of the LRC + commissions and some premiums payable, which is why you need to do all these modifi…
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Problem is that just saying commercial auto has a coverage period of > 1 year does not preclude the usage of the PAA, so it would not work. You need to explain the reasoning behind why GMA is more appropriate which is where you then talk about th…
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Constant yield curve means that you are using the same yield curve at all periods. In this example: * At time 0, you use the following yield curve 4%, 4.2%, 4.6% and discounting is as normal. * At time 1, you reset, and move everything one per…
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I believe the current taxes (line 450) on page 20.22 do not include the taxes already accounted for in the net investment income. Otherwise you are right, it would be double counting taxes which shouldn't happen
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Allocation of reinsurance premiums are the reinsurance premiums that are attributed to that current quarter. It is supposed to increase your denominator according to the formula. I think the idea is that you want a consolidated view of the ratio of …
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1) Because the duration of the reference portfolio is 3.5 years 2) I've rechanged the pattern to be based on earned premium. You should redownload the latest files 3) You are right. I should not be including that. I have made the adjustments 4) S…
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If PAA is a good approximation of the LRC, the LC is still GMA LRC - PAA LRC. I think you are mixing up the concepts. FCF is strictly a GMA concept and has nothing to do with PAA. Expounding the formula, at initial recognition (2 days before p…
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It states in the question that the criteria for inclusion of non-controlling interests in capital available is not met which means it should be excluded
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The OSFI formula. Looks like they did a stealth upgrade in July so image needs to be changed
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Yes, if PAA is onerous then it is GMM LRC - PAA LRC We are not taking UEP - DAC into account because renewals are issued two months in advance and you need to book the loss component at initial recognition. At initial recognition, UEP and DAC are 0…
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An SIR is pretty similar to a deductible, yes. The main difference is that the insurer gets involved in all cases where there is a deductible, but only gets involved with a SIR if it breaches the retention. Two scenarios: * Retention of 500K…
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I did mention that you can't group them together if their measurement method is not the same in row 55 tho - And yes if they are both onerous then sure you can group them together. You can group onerous + onerous and non-onerous + non-onerous, but n…
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I think the EP for AY 2024 would actually be 50% of the WP in 2023 and 50% of the WP in 2024 that earns in CY 2024. It's just an approximation and 50% seems fair
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Yup you are right - I'll take a look at it
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1) That's cause the losses associated with the earned portion of premium would be in your LIC instead 2) This is basically an adjustment for the average accident date which is sooner for the LRC vs the LIC. The derivation is on page 47 of the LRC…
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Yes you are right, I meant 55. For line 52, I think that is a possible interpretation, but is still incorrect and you can't group them together without first validating whether they are both PAA eligible, which they have shown in part (a) that gr…
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1) Okay I will add a note on that 2) An additional corollary to that is that the PAA estimate of the LRC need not necessarily equal the GMA estimate of the LRC for a group of contracts. When a group of contracts is measured using the PAA, you can…
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Yes you are right that I got it switched up. It should be if collateral > receivables. I also think I did not phrase my last sentence correctly - The collateral is not something that the reinsurer owes to you, but more of something that is used t…
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You'd usually do a qualitative assessment to first figure out if this group of PAA contracts are likely to be onerous. If yes, then you would proceed to calculate the GMA estimate. If GMA estimate > PAA estimate then you have a LC. There could…
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1) Yup you should always take the absolute difference as what we would like is to verify the magnitude of the difference, either up or down 2) By definition, that would not be an onerous group. But yes, it would be option b). There's no such thin…
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Not sure how that happened, but yes it should be 12900 for both the question and the answer. The signs are supposed to be the opposite of each other in both files. You are looking at two different calculation files and two different concepts: …
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Yup you are right - 2 and 3 need to be fixed
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The expenses that are amortized are the directly attributable expenses while the ones that are in other expenses are the non-directly attributable ones. You can only amortize directly attributable expenses while non-directly attributable expenses ar…
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The loss component isn't negative in part C, that's just the release of the loss component into the ISE, not the actual loss component. "Would the initial LC not be +60 and the LC recognized in 2023 be -60? Negative in 2023 only because it's bein…
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The file has been fixed to include the risk factors as well as to check the composition limit using net capital available
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I have made the changes to the Practice Exam - You can redownload it and let me know if you have any other questions
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You can either choose to discount capital at the half-year or year-end interval. Although I think it would make sense to specify a capital release pattern (i.e. as premium is earned). That would be a correct assumption, although looking back I think…
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Here you go