Staff-T1
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Graham was trying to explain the inconsistencies between the CAS past years. From a pure source material perspective, NII includes realized gains which is what I would use in the exam as this is consistent with the MSA paper
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Yeah - In any case, I do not think that wording is the main point that will get you marks here. Regardless of whether the trial verifies double compensation, the insured would still receive it
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ORSA is more principles based. There is no specific forecast period for it as it would vary based on each company's own view
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Yes, I guess AC-3 refers to how PACICC is funded. You have the original compensation fund and then when there is an insolvency, the fund gets replenished through assessments. I guess what I am trying to say is that the assessment fee goes into the c…
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Because you cannot expense it across the life of the policy. It says that it is paid on inception so there is nothing to amortize
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Yeap including RA
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Nope it is not - Premium liabilities are an IFRS4 concept and are redundant now
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Usually when ratemaking, an entire line of business may be profitable as a whole, where certain segments of the book may not. For example, personal auto Canada may be profitable, but Alberta PPA may not. Taking a loss-making group of business is usu…
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Both of these are correct -> I believe the question above was from an older version of the paper, but would still be an accepted answer during the exam
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I'm not sure I follow - Reinsurer expenses are not part of the analysis for a risk transfer, which is what the solution says. What is the discrepancy here?
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It is just about continuity and sense checking - Your base scenario projections should not vary too much from a prior model vs an updated one
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The reinsurer has to pay back the expected PV of the unpaid to the insurer in order to release the liability, as that is that is what the insurer is owed based on the contract. The insurer then reassumes the risk of run-off development.
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Yes, when contracts are onerous, LC is always positive. You can't have a negative LC
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nope
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what specifically do you need elaboration on?
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Yeah I would think so
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1) No physical damage from either 2) Skater is at fault
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Either is correct. Fulfillment cash flows is the discounted future cash flows. If you do not estimate the future cash flows, it is implied that you wouldn't estimate the fulfillment cash flows either
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Assumptions and methods
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No
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I think the examiner's report is referring to a non-auto non-pecuniary damages, while the BA solution is referring to auto non-pecuniary damages
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* The more correct definition is the one under IFRS17-1, but for the purpose of the exam just saying contract is onerous when FCF > 0 will suffice. Previously recognised insurance acquisition CFs and CF from starting contract probably will not be…
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1) The wiki is incorrect. I think it should have been changed the last sitting. Well get it fixed. 2) Yes, the difference would be the LC
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yes it would be possible. Any time you sell an asset for less than the purchase price, that is a capital loss
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Multi-line reinsurance contracts are more of a special case and is described in section 2.2 of the source
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Self-sustainability
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1) Financial Risk: Risk stemming from change in financial variables that can affect the value of the insurance contract liabilities and includes interest rate risk, currency risk, foreign exchange risk, equity risk etc Non-Financial Risk: Risk stem…
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PV(Estimates of future cash flow) + Risk Adjustment = Fulfillment Cash Flow Estimates of future cash flows are undiscounted
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Premiums receivable is what is owed from the policyholder but not yet received. UEP is the unearned portion of the premium you have already received from the policyholder
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Nope