Acquisition Example

ChristoRoyerChristoRoyer
edited January 2023 in OSFI.MCT

Hello, I have a quick question. It hasn't been ask before so I guess this is just obvious and I'm being blind.

In the OSFI Reading DRAFT (The one in the syllabus for Spring 2023), at p. 84-85, it discusses about the margin calculation for an acquisition. The total Gross premium of the company after the transaction is simply the sum for the two company. Gross Premium received for Company A is 100 and Gross premium for Company B is 50. The merged company reported 225$ in received gross premium. What did I miss?
Could anyone explain me too the rest of the calculation?

Thank you

Comments

  • grahamgraham

    Here is the calculation given on page 85:

    So the highlighted numbers represent the total gross premium for the 2 companies for Year T-1 which is 150. Then the example just tells you that in Year T the gross premium for the newly combined company is $225.

    They are working with 2 different years so you have to be careful which premiums go with which year.

  • ChristoRoyerChristoRoyer

    Oh I see, that makes sense now that I see tht. Thank you!

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