Max DPAE, Initial DPAE and Booked DPAE

miermiermiermier
in CIA.PrLiabs

Hi,

I am a bit confused for those terms mentioned in the subject line, and correct me if I am wrong:

  • Max DPAE = max(0, estimated DPAE)
  • Initial DPAE = DPAE from Accounting Department
  • Booked DPAE = min(Max DPAE, Initial DPAE)

Am I right?

Comments

  • javidjavid

    @miermier: That is correct. I would perhaps replace/clarify "estimated DPAE" with "Equity in the net UPR", so as to write Max DPAE = max(0, Equity in the net UPR).

    Side note: Just referencing a previous post where I added some commentary on some of these terms: https://www.battleactsmain.ca/vanillaforum/discussion/169/general-inquiry-into-the-treatment-of-policy-liabilities-related-to-unearned-premiums#latest

  • willm7willm7

    Hey @graham,

    Related to the last bullet point above (Booked DPAE = min(Max DPAE, Initial DPAE)), this would imply that that the Booked DPAE will remain at the Initial DPAE if Max DPAE > Initial DPAE. However, the source doesn't say anything about what would actually happen in this situation (or I couldn't find it). What do you think we should assume here?

    Thanks!

  • Staff-T1Staff-T1

    Hi,

    If your Max DPAE is > than your initial DPAE then yes you would stick with your initial DPAE. The DPAE that is calculated by actuarial is more of needed as a cap to the DPAE estimated by accounting and is calculated by the AA to ensure that the DPAE from accounting is not overestimated.

  • willm7willm7

    Thanks for clarifying :smile:

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