Staff-T1
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yes, but you'd be hard pressed to find any policies with 6 month coverage periods tho
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Yes, net income is always after taxes
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That's not right. Your net income is already net of taxes so how can that be total income taxes
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I do not see what you are looking at. the closest is his section "The effective duration is harder to calculate, but it gives a similar answer to the modified duration when interest rate changes DO NOT AFFECT future cash flows" Which is a correct st…
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That's not right - The source mentions this in section 13 - " To measure a group of contracts, an entity may estimate the fulfilment cash flows at a higher level of aggregation than the group or portfolio, provided the entity is able to include the …
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Yes to all 3. 1) Income in the numerator of ROE should always be post tax. In #25 F2017, there was no way to know how much income tax should be charged which is why that is fine. 2) Capital gains are included in investment income here: 1500 (inves…
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I wouldn't look at it from an opening and closing rate. I would look at it as more of "what curve should I use at each period". For this example, you would use the same curve at each period. That means that at time 1, from the same discount curve, y…
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Sorry which exact battle card are you referring to? I am having trouble locating it
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To make comparison easier between the LRC and LIC. If the discount rates are different, the long-tailed nature of the business amplifies the effect of a differing discount rate on the PV FCF
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I think yes, it would be row 999
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Probably a rounding error when they calculated the payment pattern. They have already provided you the paid losses directly
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a) Yes this is true b) Not true as you mentioned above c) Will have positive FCF and no CSM d) Will have to book a LC so it will be non-zero
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Your interpretation is not quite correct here. Your opening discount curve means that for the payment of 187500, the discount rate that will bring it to the PV is 4.2% compounded over 1,5 years. I do not know what you mean here "opening rate is 4.2…
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It's just converting the dollar amount of risk adjustment to a % basis of the BEL. You are usually provided the RA % directly and skip the dollar derivation of the RA. This question is meant to provide you an example of how you actually arrive at th…
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Well yes it might be - But I don't think I have seen a policy like that in real life
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I'll give an example: Imagine a reinsurance contract initially set for three years. If both parties can cancel it at the end of each year with a three-month notice, then at the start of the contract, the reinsurer is only firmly committed to providi…
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I think personally for me, the biggest challenge is proving that the PAA estimate is close enough to the GMA one. There's a lot of uncertainty and as you mentioned volatility, given a lack of historical data so it's hard to say pass a PAA test from …
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That's cause your cost of capital is basically as it mentions the "cost" of holding capital to support the business. At every period, you hold the **total **capital to support that group, not the incremental capital which correspondingly means that …
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Mortgages are usually considered an asset (i.e. the insurer is supplying a mortgage to a third party) There would be no reason for an insurer to take a large mortgage (usually, unless purchasing a building) But in an exam, it would be clearly stated…
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4) Direct UEP is just related to direct contracts whereas UEP relates to gross written premium (Which includes assumed reinsurance in addition to direct written premium) 6) Technically it is UEP = premiums received + premiums receivable - earned …
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There is a interactive question in Mini Battlequiz 2 which you can practice on for this specifically
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I do not believe you are given the definition of what exactly is in Capital B and C so you wouldn't be expected to calculate them on your own. The 40% and 7% are mentioned in section 2.2
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No, reinsurance would not be recognized before it is bound
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In sample 29, they included it in the incurred claims and it flows through into the ISE and correspondingly the ISR
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1) Yes 2) Yes 3) I's the latter, premiums that you are supposed to receive, but they are still with the policyholder 4) D UEP? Could you clarify what you mean by that please 5) Yes exactly. For GMM you are strictly looking at FUTURE cash flows. …
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Which cell are you looking at? I do not see the $100 being discounted
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These numbers would come from actually running the FCT. The solvency scenario usually occurs during the projection period, so sometime after 2022. It could be spread out over multiple years, for example an inflation or recession scenario. The solven…
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1) Yes FCF + CSM = 0 at time 0. 2) Correct 3) The CSM is drawn down as service is provided (usually uniformly unless you have certain seasonal policies like cat reinsurance for example) I am unsure what you mean by difference will be larger as tim…
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Typically you just need to approximate a very small change so 0.1% is fine; 0.01% is also okay. I think 0.01% (1 basis point) is actually the most common.
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AA's MAE report is done as and when needed. Where are you seeing the statement "as requested by OSIF" It is requested by OSFI once a year and to my knowledge I don't think I know of anyone who has done an FCT more than once a year