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Examiner's answer to part c of this question is the same as the description of the SAP treatment of retroactive reinsurance in the wiki: https://battleacts6us.ca/wiki6us/Odomirok.22-23-GAAP#Ceded_Reinsurance_-_Retroactive:_2017.Fall_Q12:~:text=Re…
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p_T, the tax benefit of commutation for primary, is the negative of (change in taxable income for primary) x (tax rate for primary). That's why it is added in primary's benefit expression. Yes, your way, with your definition of p_T, works too. Bu…
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In a question that asks to back into the reserves commuted from another relevant item, the perspective would have to be clarified. They may also ask for the range of acceptable price, for which reserve amounts from both perspectives are needed. The …
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You are right that Schedule P Part 2 is gross of discounts. However, since income, which goes into change in surplus, may include change in discounted loss reserves, ratio 12 may still be affected by changes in discounting.
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p_T is as you define it above. primary insurer benefit = price - (economic-discounted primary's ceded reserves prior to commuation) +(p_T) I don't follow what you mean by "flipping the equation."
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"Agents' balances" are the premium monies held by the agents before they get remitted to the insurer. The insurer doesn't yet hold them. By contrast, "ceded reinsurance premium payable" is premium due to the reinsurer that is not paid yet, so the in…
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Sure, good luck.
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Correct. In a simplistic view, surplus0 + income = surplus1. Income already takes out the full acquisition expense from premium, so surplus1 includes the effect of PPE. In FAIT, we don't include m(S), because it belongs to FACS. But we still w…
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Sure, good luck.
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If you guess at whether it's in range, not give the actual range, and get it right, you may get full points for it. I can't guarantee it, though.
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We worked on this issue earlier. Have a look at this thread and see if it answers your question: https://battleacts6us.ca/vanillaforum6us/discussion/605/statutory-loss-reserves-are-booked-at-their-nominal-undiscounted-value#latest
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Anyone that is certified after 2012 would have been unauthorized before 2012. But not everyone that was unauthorized before 2012 is certified after 2012. Some remain unauthorized after 2012. Does this answer your question?
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This is 2019.F.19. Here is my answer to the same question as yours from earlier: https://battleacts6us.ca/vanillaforum6us/discussion/597/fall-2019-19#latest
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Company loss & LAE ratio is the average of the loss & LAE ratios of 10 AYs, and each AY's loss & LAE ratio is capped at 300%. What you say for the R4 charge is correct.
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Certification embetters an unauthorized reinsurer's standing, so that the cedent needs to put up less reinsurance provision for it than for an unauthorized reinsurer, but still more than that for an authorized insurer. Since there was no "certificai…
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I think your question is "why" rather than "how." I guess it's because it's a mechanism that functions for the intended purpose. In GAAP, as in SAP, full amount of acquisition costs are subtracted from earned premium in deriving income. But addition…
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We are working on a rewording of the Pop Quiz Answer and will let you know soon. Sorry about the wait.
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Observe the following passage from the source text: ". . . Neither SSAP 62 nor FAS 113 provide a clear numeric trigger of when risk transfer fails. The “10-10” rule was developed as a benchmark to give meaning to the criteria in the two accountin…
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RBC charge for reinsurance recoverable is no longer a uniform 10% The change is explained in the last three paragraphs of p.271.
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1) Yes, "Funds held by company under reinsurance treaties" is matched by a portion of one or several of these assets. 2) "Funds held by company under reinsurance treaties" is not adjusted, because it is for reinsurance assumed. In the problem, th…
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Certification improves the standing of an unauthorized reinsurer, but it is still not authorized by the reporting entity's domiciliary state. The reinsurance provision for a certified reinsurer is less than that for an unauthorized reinsurer, but mo…
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Yes, because IRIS 4 formula puts voluntary pools under unaffiliated.
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In the first table of givens, net UEP shows up only once. It is not in the second table. I shouldn't have said "balance for all AYs." UEP is a CY concept; it is not based on AYs. Premium is associated with, but not based on, the accident year con…
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Yes, they are reserves, because they are given as Balance Sheet items.
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Your questions is more relevant to the Porter.2-Devlpt section of the wiki. In there, the relevant passage is the following: 1945: McCarran-Ferguson Act In 1945, Congress passed the McCarran-Ferguson Act in response to the Supreme Court ruling…
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zachboaz: 1) Yes, since you weren't given it. 2) No. Loss incurred in 2013 would be given in the 2013-year row of the 2014 Schedule P.
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lought10: The net UEP is the balance for all AYs, as of end of 2014.
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Sorry, your statement about the second table is correct. In the first table, for net UEP, you are given a single balance for all AYs, as of end of 2014.
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Your statement about the second table is false. Each column provides balances as of end of that CY, for all AYs. The first table, where net UEP is found, is not set up this way. You only have the balances as of end of 2014. That single number is the…
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It is only the agents' balances charged off or recovered that is added to Other Income. The given was agents' balances (not charged off or recovered).