Staff - AC
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The treaty terms in the example apply to the primary and the reinsurer alone: there is no third party. Reinsurer assumes primary's losses in the layer of (1M, 3M), subject to a deductible of 1M to be covered by the primary.
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I read the two answers to be within similar lines. The key is, GAAP rules for discounting are more relaxed. Tabular discounting uses life tables, so it is appropriate for lines like workers comp and long-term disability. Non-tabular discounts allow …
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What they call "surplus increase from cash received" in 26b corresponds to what they call "commutation price paid" in 18b. Note that they both have the effect of increasing surplus. It is "paid" by the reinsurer, and "received" by the primary, but t…
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Yes, that answer is meant to read "Schedule F Part 3." We'll correct it, thanks.
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I find that the parts column is a fair assessment of the parts necessary for the matching uses. It offers good guidance for questions where you are asked to elaborate on phenomena like trends using Schedule P data.
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I could not find in the Odomirok text the place where she mentions medical tabular reserves. But it is a real phenomenon and comes up in certain past exam questions where they should be treated accordingly. Graham has examples of such questions in t…
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Can you point out which battle card this is, so that I can check?
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Ok, I confused net amount recoverable with something else. This is an item particular to Part 6 where the balance sheet gross of reinsurance is set up. It is a hypothetical amount needed to balance the asset and liability, after all the actions of g…
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Intercompany pooling agreement applies to all portfolio years as of a given evaluation point, Dec 31 2012 in this case.
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Achieving no income tax means that we have to offset the 37500 taxable income by way of the effect of the commutation. So we equate -37500 to the effect of commutation.
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Can you give an example of where double-counting may be an issue?
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Cost of surplus (capital) can be incorporated into the profit provision that is used in ratemaking.
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Yes, this last one looks complete to me.
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Yes, it does.
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Part 1 does not separate authorized, unauthorized and certified reinsurers, whereas Part 3 does.
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Yes, R4 is calculated on reserves gross of reinsurance recoverables that are subject to deposit accounting.
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The former is all recoverable - on paid and reserve. The latter is recoverable on paid only.
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Yes, it shows the changes in surplus that are not displayed in the Income Statement.
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US bonds is definitively class 1. Graham's assumption in the footnote was that class 1 was also included.
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Generally, a pool cannot be an affiliate of a single company. For the last two items, you can note that you are assuming they are non-affiliates in your answer.
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Yes, it's fine to note your assumption when something in the question is not clear. You stand better chances of getting points that way. On Odomirok page 12, footnote 5, I find the Law Manual's definition of tabular reserves being given. The stat…
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We will try working up some such problems and let you know.
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Your question is valid. It's not clear at all why prepaid reins prem should not be subject to earning as well. Odomirok does not shed any light on this, and we don't know of any other syllabus source that does. It may be that there is an extraneous …
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Yes, I think it works. Essentially, N * ( K / ( N * R ) ) = K / R.
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The wiki covers all the asset and liability differences between SAP and GAAP that are included in the syllabus. That will be the extent of your responsibility for the exam.
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In this question, for example, SAP admitted asset amount is needed. Goodwill would not be in this amount whether the acquisition was more or less than 10 years ago, because more than 10 years ago is not considered an asset, and less than 10 years ag…
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10 years is the threshold used for the amortization of goodwill into unrealized capital gains, in SAP. It is not relevant for GAAP, although GAAP evaluates goodwill for impairments on a regular basis.
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Sure, good luck.
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other comprehensive income (OCI) (Odomirok p.327)
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Increasing trends in an average case os triangle ("severity" is redundant) are associated with reserve strengthening, i.e. putting up more case reserve per case. Whether this leads to bringing reserves up to the correct level or to over-reserving de…