Staff-T1
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Comments
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That's a fair assumption to make. I doubt the exam would go into this much detail though!
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Yup there's no ULAE related to the paid portion cause it would already have been incurred in the financials so no need to reserve for it
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Recognizing as an expense means you don't defer the acquisition costs and fully recognize all of the expense at day one. You subtract the entire portion that is deferred . The premium received at time 0 is half of 2500 because the question…
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They reconcile exactly because it is stated (column on the left) that the Net investment income from 40.74 comes from 20.22 Interest revenue on financial assets comes from 40.72 Both the net investment income items comes from page 40.74. I th…
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It's fine to use it as either a positive or negative, as long as you are consistent throughout your calculations. I generally prefer PV(cash outflow) - PV(cash inflow) + RA as that is how it is most commonly defined.
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MSA ratios was in the syllabus last sitting but is not on the syllabus this sitting so your experience would make sense
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The contract incepts at Dec 31 2023 given that the amount of cash flows remaining at the end of 2023 is 100%. You start with -1 because the first period in which capital is released is at the end of 2024. Yes, assuming capital is released at the end…
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It's the amount of capital held at the beginning of the year
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You can take a look but I would spend most of my time on the Fall 2025 practice exam
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Yeah that's probably a more accurate way to say it tbh
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I'll answer your questions in order: 1. I am calculating it as FCF + CSM where the FCF is calculated immediately after the first premium and associated expenses are paid 2. Because those are future cash flows that have not yet been incurred as …
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It states that the company wrote business in 2023 and it states to calculate the LIC as of Dec 31 2023 which means year 1 has passed and you are looking at things from year 2 onwards
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Your understanding of the GMA is correct. The LRC ex LC is the PAA estimate of the LRC (UEP-DAC) The LC when your measuring using the PAA method is not the same as when you're measuring using the GMA method
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In Q27 you are already at year 2, which means the unconditional payment pattern needs to be rescaled to get a remaining payment pattern as of year 2. In Q9 they have already provided you a conditional scaled payment pattern at the end of AY 2023
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You haven't received any premium yet so there's no unearned premium and no acquisition costs
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No you cannot as they're looking for the LRC GMA by asking for the CSM in the question
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In the sample questions they've already rescaled it for you by providing you the conditional payment pattern at the end of the year. In the sample duration calculation they've only provided you the unconditional payment pattern which means you …
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I don't see anything wrong with statement 1- it's saying that you don't discount except when you have a significant financing component Second statement is that even when you don't need to discount, a special case that you need to consider is …
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No you are right, that is an oversight. I have made the fixes are reuploaded a corrected file
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MSA ratios is not on the syllabus nor is it on the table of contents though so it is outdated
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To calculate CSM: FCF = -2500 + 1625 + 320 + 162.5 = -392.5 CSM = 392.5 GMA LRC: 1625 + 162.5 + 70 (Removing expenses paid at inception) = 1857.5 LRC = 1857.5 + 392.5 = 2250 Yes you are right, there is double counting when I actually type…
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The 143K number comes from the net loss reserve calculated in step a) which has already deducted the 7k reinsurance recoverable
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yes to question one It depends to question 2, whether the reinsurance reflects a net cost or net gain. Basically the allocation of reinsurance premiums (premiums paid to reinsurers) should have an opposite sign from the reinsurance recoverables
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ii) Reserves are by definition the unpaid claims iii) The 140K here is the unpaid claims recoverable from the reinsurers. The MSA.ratio paper is no longer on the syllabus and this question is not relevant. Only the MSA.legend paper remains on th…
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Yes you only have a financing component when using PAA
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Aggregate annual premium and annual insurance revenue can be used interchangeably here
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Yes Q4 refers to cumulative capital deployed
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Yes, unless they specifically call it out in the question or give you a discounting pattern for the FAC
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So this one is interesting - The problem is that when you look at the MCT instructions 4.3.3.2, they are not looking for the LRC, but several components of the LRC + commissions and some premiums payable, which is why you need to do all these modifi…