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Hi there,
I am trying to figure out the reasoning behind the deduction formula of D=(UEP+O/S+Reins Re)-(Reins Pay + NOD + LOC*).
I am trying to understand why we need to deduct if D > 0. What's the reasoning behind it?
Thanks!
Hello,
One clarification: Are you referring to Quiz 3, Q8?
I'll refer to 4.3.3.2 and 4.3.3.3 of http://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/gl-ld/Pages/mct2018.aspx. The first three terms are amounts receivables and recoverables, whereas the last three terms are acceptable collateral.
In this case, if D is negative (meaning that you have more acceptable collateral than amounts receivables & recoverables), then it can be used to reduce the capital requirement for unregistered reinsurance.
Thanks Javid!
Comments
Hello,
One clarification: Are you referring to Quiz 3, Q8?
I'll refer to 4.3.3.2 and 4.3.3.3 of http://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/gl-ld/Pages/mct2018.aspx. The first three terms are amounts receivables and recoverables, whereas the last three terms are acceptable collateral.
In this case, if D is negative (meaning that you have more acceptable collateral than amounts receivables & recoverables), then it can be used to reduce the capital requirement for unregistered reinsurance.
Thanks Javid!