Question 21 part c

marodriguezmarodriguez
in EXAM: 2019-Spring

I'm confused by the Sample answers from the CAS on this one. According to a note on COPFLR page 102 "For companies participating in an intercompany pool with 0% share, Exhibits A and B of the lead company must be attached as an addendum to the SAO."
However the Sample answers state "Yes" to "Must attach the Actuarial Opinion of the Lead Company".

Please clarify.

Thank you,
Marco

Comments

  • Staff - SJStaff - SJ

    You technically only need to submit Exhibits A and B for the Lead Pooling company in a 0% intercompany pooling situation, not the entire statement. I agree that the examiner's report could be more clear on that particular item.

  • michael7michael7

    The Examiner's Report also states this about Part C: "Notes: Candidates were not marked incorrect if they interpreted Company A’s intercompany
    pooling percentage of 0% as not participating in a pooling agreement. "

    This seems like it would drastically change the answer since you would not need to disclose anything about the pool if the Company is not participating, right?

    Am I interpreting this comment wrong or would the sample answer still be the same?

  • Staff - SJStaff - SJ
    Your understanding is correct. If a company does not participate in an intercompany pooling agreement, then the only SAO/exhibits that should be included are the ones for that company.

    Intercompany pooling of 0% means there are no net reserves - nothing gets allocated back to that company from the larger pool. In this case, you must still include Exhibits A/B from the lead company.
  • michael7michael7

    Thank you, this makes sense.

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