miguel
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May we look at an example? Given a dollar standard of materiality of $2M and two entities with income of $100M and $10M, the standard of materiality as a percentage of income would be 2% and 20% respectively, so like you said in your example 20% is …
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does the 2nd paragraph from the source text refers to the reinsurance load included in the premium? or the reinsurance load only accounts for private reinsurance which seems to be separate from government reinsurance?
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Actually I think @graham was referring to the formula in CIA.Runoff because calendar year emergence is how the paper defines runoff. Also the paper mentions that the evaluation of runoff is computed using the formula that I identify as excess or def…
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My question was regarding the level of materiality depending on the size of the company. In your example based on income the lower the income the more rigorous but according to the text the larger the entity the more rigorous, so if your example …
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Are there any restrictions for underwriting in Ontario?
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Your example makes sense but the source is implying the opposite for lower level (more rigorous for larger entities). How do you explain this?
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nvm I just realized both the company & AA perform separate valuations and if the company's valuation is much lower based on materiality standard then AA would sign a qualified opinion
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what is the difference between a regulator and a regulatory body? I'm confused you mentioned CIA is a regulatory body but don't actually have any power
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do you mind pointing to the formula used? The solution is using a different formula to calculate the countrywide PML. For 420 they took the max but not for 500 years. I couldn't find anything in the OSFI paper
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I'm still confused. Can you please explain the difference between (26) and A2 in page 70.60?
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If I understand correctly the wiki says the margin required can be reduced based on the result from the deduction from capital available for which LOC is needed? But if deduction > 0 then we don't even need to check LOC because margin would just …
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does that mean risk factor is the same concept in both FCT and MCT readings?
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Regarding P1 above I also noted it appears in the deduction for unregistered reinsurance but I don't understand why it has the same sign as reinsurance commissions (which is an amount paid to the insurer from the reinsurer). That would mean P1 is al…
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Maybe the difference resides in subtracting from "assets supporting liabilities" vs adding to "amount of excess or deficiency"? The difference is still unclear for me but I found this in 2015 Fall 13
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1) I notice the formula for runoff is the same as that of "Excess or Deficiency". Would you say, they are conceptually the same? In Graham's example runoff sounds more like development but from the formula I understand it more as the gap between the…
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Can you confirm if you meant (60+40.8-20)* 1/2 instead of (60+40.8-20)*.02 ? If not can you explain where this fits in the calculation?
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(60+40.8-20)*.02 = 1.616, where does this fit in the calculation? I'm assuming you meant (60+40.8-20)* 1/2 = 40.4, which would make sense if LRC balance should be 0 at the end, but have you looked at the answer provided by the CAS in Sample 7? LR…
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40.53 =(40.8 + 20 ) * 2/3 how do you get 40.4? Also note that in Sample-7 from the CAS Excel file the final LRC balance is also NOT zero. It's a different problem so the numbers are different but the formulas are the same. LRC = -0.42 @graham
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so when expectation hypothesis refers to term structure determined by market expectations of future interest rate changes, what does it mean by rate changes if the rate has to be locked?
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thanks for the explanation of unwinding in simple words. Given that the effect of discounting is calculated at locked-in rates, and unwinding allows the use of distinct discount rates (for the last 2 methods), does this mean that unwinding will not …
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Since interest accretion does reflect the time value of money probably you meant that the bullet below refers to changes in the discount rate assumptions (that would produce changes the time value of money) due to financial risks? As opposed to the …
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Is "reduce recoverable for AIC/RC" the same as "reduce reinsurance held asset"?
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thanks but the second paragraph of the section I was highlighting starts with "if acquisition cash flows are NOT recognized as expenses when incurred..." So wouldn't that be the opposite to the "immediately option" that you're referring to?
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what is AIC/RC?
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One more question, if reinsurance program has changed significantly wouldn't that make both net and ceded losses equally inappropriate? Note that the solution of 2015Fall-26 says net losses are actually preferred in this scenario, which contrad…
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thanks! it's confusing because the question in the wiki refers to reinsurance issued but the answer seems to refer to reinsurance held?
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How ceding commissions could be classified as an expense for the ceding insurer. Isn't that an amount paid by the reinsurer to the insurer?
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Hi, I'm still confused by the signs. How does the formula of FCF differs between reinsurance held and insurance issued? FCF insurance issued = outflow - inflow + RA so CSM = inflow - outflow - RA if not onerous (opposite signs of FCF) FCF re…
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That's actually a good point @maazzu94. I would also be wondering why PAA LRC (excl. LC) would ignore the effect of cancellations even on the portion related to premium received? FCF seems to use premium net of cancellations to estimate the Loss &am…
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One more question, given that CSM is used to offset the negative liability (inflows > outflows) so that LRC = 0, in which cases it would make sense to reflect a negative value of LRC in the financial statements? Initially I supposed LRC would alw…