2018 Fall Q15

darrenteodarrenteo
in EXAM: 2018-Fall

Hi, I was reviewing this question on the calculation of the provision for reinsurance, and noticed that the formula is slightly different from what we were told:

"Reinsurer A provision for reinsurance = 0.2*max(Total unpaid recoverables – min(total unpaid
recoverables, security), amounts 90 days overdue including amounts in dispute)
Reinsurer A provision for reinsurance = .2 * max ([5 + 6 + 9 – min(5+6+9,6.1)], 6+5) = .2 * 13.9 =
2.78m"

Given the formula, I thought that the formula should be Total Recoverables - Collateral?

Thanks,
Darren

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