Staff-T1
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Comments
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The release of the RA for LRC and LIC will increase profit
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Looks like the CAS has read my comments here
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The difference in Q22 is that this is before initial recognition so there is no premiums received. You also never consider premiums receivable under PAA so that should trivialize things
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If you are receiving dividends, those dividends would be in NII
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Can you reload and check now?
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Strange - Let me double check
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Expected premiums are analogous to premiums received in the practice 2 file. For Q22, you are right that 2250 would be the PAA LRC but the question is asking for the GMA LRC
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Case your PML is only 550, which means that the reinsurance of 60% only covers 50M (550 - 500 attachment point)
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But where does it say any groups are onerous? If your logic is that lower credit scores = higher expected losses, that doesn't work cause higher expected losses does not necessarily imply onerosity
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Yes you are right I swapped the order around. I'll make the changes above. Thanks!
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The thresholds no longer need to be memorised as they were part of an old paper that is no longer on the syllabus for this sitting. The CAS did not update the sample questions to account for thus
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It's certainly not in the spirit of the question but yes you can say that
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The negative LRC just follows from the calculation where we exclude whatever cash flows have been received. It's conceptually possible and while more common under PAA, it just means you have a negative liability since a large portion of your total …
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I'm not 100% sure - I would just memorise in case
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1) It's not needed as the CAS will always provide these numbers 2) Creating a long question takes time and many iterations and what seems like adequate commentary to me might not seem adequate to others. We'll add some commentary on question f)
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1) Other comprehensive income, accumulated other comprehensive income and comprehensive income. I'm unsure what do you mean by how they are treated 2) Dividend.payments are subtracted from NI and they reduce equity 3) Realized capital gains wil…
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No, you don't need to do. This adjustment only needs to be applied to claim payments made and would not need to be applied to the release of capital
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Nope, you only adjust for taxes when moving from the target ROE to the cost of capital rate. You can then forget about the tax rate after doing so
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Yes to both questions. I think the key point is that if you don't target any particular group systematically (ex young drivers, certain genders or skin colours) then you are not being biased, which is why if you price purely based on driving behavio…
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Market and operational risk are not considered when setting the RA, only risks related to insurance should be considered like reserving risk and underwriting risk
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1) The numbers above are all in the two tables in section 4.2.2.1 and 4.2.2.2 2) Earthquake Reserve Component and Earthquake Reserve I've linked most of what I could and the hard coded numbers are those where it was difficult to link to speci…
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"Bias in P&C pricing is any situation in which the outcomes of ratemaking models are systematically less favourable to individuals within a particular group and where there is no relevant difference between groups that justifies the differ…
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Yes you can skip it
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No, because it says in the question they are paid at inception
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They average yield provided already subtracts the investment expenses so you exclude them by adding it back. Your definition of investment expense is correct
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Expected credit losses are part of the credit spread so you don't want to double count them and investment expenses should be excluded cause that's specific to the reference portfolio and has nothing to do with the liabilities
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Yes, you are right - The section around capital B and C is excluded. I actually misread it as capital A 😅
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Sorry which specific files are you referring to?
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For first question : Yes you would need to know it Question 2: Initially I didn't think so, but upon doing some research I think it makes sense to also includes preferred shares in the equity component Question 3: Yes preferred shares are in the…
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The net loss component = LC - Loss recovery component. The loss component itself isn't affected by any reinsurance