Spring 2016 #26b - Reinsurance Recoverable RBC Charge Factor Question
There is a 0.10 RBC Charge factor to the reinsurance recoverables for R3, but a 1.00 RBC charge factor to the reinsurance recoverable for R4 portion. Is this correct way of thinking about this?
In the Battle Acts - RBC Charges (R3 - Credit Risk) problems this RBC charge factor is "N/A" and the "reinsurance recoverable charge" is given the full amount of the reinsurance recoverable in allocation. Does this mean that the actual reinsurance recoverables in the BA quiz is really x10 what the RBC charge is listed on the recoverable because there is an implied 0.10 RBC Charge factor? Are the amounts listed in the Sch F (col 35-col 36) always the amounts after the applied .100 RBC charge factor?
Comments
I believe back in 2016, you had to memorize RBC charge factors - which is probably why you are confused where 0.1/1 used in the solution came from. On exams now, I believe they would have to provide you with the factors/charges.
There is more detail on this under "Assets subject to R3" in the RBC article.
How do we know that RBC charge factors will be provided now? That's kind of of a big deal not having to memorize all of them.
We do not know. We reason that it is too much detail to be expected to be committed to memory, and that 2016 was a one-off. See the wiki note here:
https://battleacts6us.ca/wiki6us/Odomirok.19-RBC#Week_2:Day_3.28R3_with_intro_to_R4.29:~:text=Now%2C%20in%20(2016,get%20her%20started!)