Satisfactory financial condition for DCAT/FCT
Hi @graham or anyone who knows the answer,
in the new version of CSOP Part 2500.09, under going concern scenarios, the insurer should meet the regulatory minimum capital ratio which is new and is different from the old condition for base scenario (meet supervisory target). Does regulatory minimum means 150% or 100%?
That means, under the old definition:
for the base scenario → must have MCT ratio > 150%
for the base scenario and all plausible adverse scenarios → must have assets > liabilities
but under the new definition:
under the solvency scenarios → must have assets > liabilities
under going-concern scenarios → MCT ratio > ???? (150% as shown in https://battleactsmain.ca/wiki6c/CIA.CSOP or 100%?) I would think it's 100%
under base scenario → MCT ratio > (internal target as determined by ORSA)
Thank you so much!
Comments
You have raised a good point. After I looked through the syllabus again, I believe your conclusion is logical. I will amend the wiki and link to this post.
The MCT reading states:
The reading also states:
Going back to CSOP 2500, the old version of satisfactory financial condition says that the base scenario must satisfy the supervisory target, which we know for sure (from old exam problems) is 150%. In the new version, the base scenario must meet the internal target as determined by ORSA, which is presumably greater than 150%.
The going-concern scenario is a new concept and is a certain type of adverse scenario (non-severe) that must satisfy the regulatory minimum ratio, which most probably means 100%. (I'm not sure why the reading doesn't just state the percentages explicitly since that would make it all much clearer.)
Thank you @graham !
Hello @graham,
I believe the pop-quiz in the CCIR Instructions should be update to MCT Ratio=100% instead.
Please let me know!
Thanks,
Andrew
Yeah I think so
Corrected, thx!