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Yes, RMA receives part of the premium. It also subsidizes some of the premium, and uses tax revenue to partially pay for the losses.
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If investment taxes are not given, then you assume the investment return amounts are net of those taxes. Yes, those are two separate taxes.
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Sorry, yes, 1.5.
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Think of it this way. You start out with resv0. Payments are made on that reserve between 0 and 1. Those payments reduce resv0. The remaining reserves are re-evaluated, and made to be resv1. This is the loss reserve development in its entirety. T…
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Rethinking it, I think you're right. If the COR were greater than 120%, then the RBC ratio range corresponding to CAL would be 150-300%. I don't think this particular problem contemplates that case: I don't ever get anything other than COR = 100%…
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Yes. T also includes recoverable on reserves.
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Yes, correct.
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Collusion is prohibited as per Sherman, in the letter and the spirit of the law. Paul v Virginia briefly made Sherman not applicable to insurance, before US v SEUA reinstated its applicability. I only mentioned SEUA, because mec06e had made an ar…
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For less than 50 issuers, the BSF will be 2.5, no matter how many issuers.
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You can't use the trend test in the set-up of this problem. For the trend test, you have to start with an RBC ratio. If that ratio is in 200-300%, but COR > 120%, then company is considered at Company Action Level. Whereas here, you're asked to c…
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I think you are referring specifically to the change in reinsurance provision. That amount is shown as Prior - Current to make it additive with the other surplus change items. You would subtract Current - Prior from the other items, because an incre…
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The wording does trip you up a bit. Then again, if Best, Moody's, S&P all use interactive rating, that means all the rating that is worthwhile out there is interactive.
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I see that UEP gross of EBUB and rate credit (row 38) is used for Balance Sheet UEP liability item, and UEP net of EBUB and rate credit (row 35) is used for IEE surplus allocation calculations.
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In UIE Part 1a (my page 436), EBUB and rate credit are added, and UEP is left at that. Where do you see them "getting subtracted immediately afterwards?"
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My source has only 502 pages. https://casact.org/sites/default/files/2021-03/6U_CAS_Financial_Reporting.pdf
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Sorry about my earlier error. Yes, it seems commercial auto is excluded.
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I don't see a UEP calculation there. Could you give me the page number?
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Yes, your formulas above are correct.
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I am also familiar with the convention of using "foreign" for other U.S. states and "alien" for foreign countries. But this article uses "foreign" for foreign countries, and makes very little use of "alien." That must be why the wiki notes are also …
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Could you tell me the table number for the fictitious example where Odomirok makes this calculation?
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If you have 2 companies where everything is the same since the inception of the companies except for the discount rates, then the 2 companies would have different surplus amounts for all years and hence different IRIS 12 ratios. But rationally, the …
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Retroactive reinsurance may or may not involve transfer of risk. Even when it does, its treatment in financial statements is more similar to deposit accounting rather than reinsurance accounting. But we also think the last bullet point in the examin…
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The text does not give a threshold. I would say, 75%.
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UW loss. It is meant in the sense of gain/loss, i.e. reinsurer's loss exceeds its premium.
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You need to read section 3.3.2 Interest Rate. Have a look and let me know if you have questions on it.
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These two answers mean the same thing. In the second answer, the private company services these policies by collecting their premium and paying their losses, but it doesn't assume the premium or loss.
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The section on Parameter Risk explains this (page 19 in the text).
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In RBC wiki, Graham referred to it as "Combined Operating Ratio," but the text actually calls it "current year combined ratio" (page 303). And IRIS 5 is called "Two-year overall operating ratio." So, the two ratios are different.
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Where do you find UEPR calculation in the Odomirok.18-IEE wiki please? So that I can compare to the fictitious example in the source.
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Graham came out a little too strong against reinsurer's investment rate as an alternative. It is discussed as a possible alternative in the text, albeit a suboptimal one, and that should be enough to offer it as an answer to this type of question in…