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Yes that's right. I've updated the excel here
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I think what they're implying here is that they are evaluating for a loss component, not that there is necessarily a loss component. But yes if they already have a loss component then it would for sure be onerous, which would be too simple and clear…
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Yes that's right
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There isn't a method of moment calculation in the LRC paper. With regards to the excel exhibit, I think you should be familiar with the calculations but I don't think you'd need to be able to reproduce the whole document exactly in the exam
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No, you're supposed to deduct (D+E+F+G+H) - (A+B+C) if it is greater than zero. I've attached the corrected files here
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Regarding the time AAD adjustment: 1. It is only applicable to the LRC 2. Yes that's correct. I doubt they would require you to perform this calculation, what more for policies with terms > 12 months. I think it's safe to just memorise that …
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Future acquisition costs not being discounted implicitly assumes that all future acquisition costs will be fully incurred at day 1, so there is not need for any discounting. DAC is not used in the GMM and does not need to be discounted. You're confu…
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Yeap it's a typo. Your understanding is correct
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You can use credit score for Auto, just not in Ontario. Grouping just refers to ensuring similar risks are placed together. If credit score isn't a factor for rating, then why shouldn't they be grouped together as they'd be seen as virtually ident…
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No I'm not saying that. If you're discounting premium liabilities or LRC in this case, you need to "shift" the accident date by subtracting (0.5-0.33). The derivation relies on sole calculus that you do not need to know but is basically because you'…
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As I mentioned above in October last year, the implicit assumption here is that future acquisition costs are incurred immediately, which means while they should be discounted, they aren't because they're not spread out over the term of the policy wh…
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Part 4: Yes, we have one column for the cancellations adjusted DAC and the other column for the unadjusted DAC. What you are doing is removing the expenses related to policies that are expected to be cancelled (net DAC - gross DAC) sometime during t…
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Yup that's right
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The unearned premium that is used to derive the future acquisition cost is already "discounted". The whole point of discounting the premiums is to bring all the future premium inflows to time 0. In the case of the unearned premium, they are all alre…
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For Q8: Yes that is right, we want to group into as few groups as possible, whenever we can. For Q12: Measurement model is THE most important consideration for making groupings - period. You cannot a group of contracts measured under GMM and anoth…
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I think either would be accepted given that it is vague as you mentioned but thanks for pointing it out!
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It doesn't matter. You can discount at year end or mid year if the question doesn't say specifically. However, if it's stated in the question that capital is released in the middle of the year or end of the year, then you'd have to discount accordin…
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The BattleActs solution is the most correct version. I do not think the CAS method reconciles with what is in the CIA paper, in the sense that their LRC is not equal to 0 when all coverage has been provided which should not be the case. If you chang…
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What are you referring to by time periods?
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The grid premium is kept by the insurer not the government. It's just meant to limit how much premium they can charge
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Hmm I'm not sure cause it's not in the syllabus - I think you'd probably be better off focusing on what's in it given the exam date proximity
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The CAS solution is correct. An internal capital target is meant to reflect how much economic capital a firm needs to run. There is risk from a loss of value due to rising interest rates reducing the PV of bond cash flows. And no a govt bond isn't c…
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For number 2) it's not saying that it's zero, just that the indemnity should be capped at the original trilogy limit which is 100k
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The LRC is one component of the ISR, but the ISR has other components also as shown above. The loss that determines the loss component is not the accounting loss which you are referring to here
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Alberta uses prior approval for their auto program. At any point in time, insurers have to charge min(insurer premiums, grid premiums) and the grid premium is determined by the AIRB which is the government's insurance regulator. Max cap is based on …
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The CAS examiner reports are meant to be a sample list of answers that obtained full marks. It is never a comprehensive list of every acceptable answer
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I basically need 2*MCR which is the operating target. You are given 1.5MCR. Dividing by 1.5 gives you MCR, then multiply it by 2 to get 2MCR. The bonus question uses 1.5MCR as the target ratio. This question specifically says they would like to u…
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The two different methods to unwind using spot rates are explained in section 10.2 rows 7 and 9 of the source material. No, the solution is basically showing the difference in PV of the liabilities evaluated at the end of 2024 vs beginning of 2024…
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Sample 18: 0.333 is just the average accident date adjustment for premium liabilities/LRC. There is a derivation for this in one of the old premium liability papers under IFRS4 using some integration, but you just need to know the output. Sample 2…