Staff-T1
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What it is saying is that there is an "industry" correlation matrix and for companies with smaller reserves, their own correlation matrix would show lower correlation than the aforementioned industry correlation matrix. AM best uses the industry ma…
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Yes, I think I sort of agree with you. When I read the paper, EPD is set such that the pure premium for an arbitrary aggregate XOL with attachment point X /reserves = 1%. It is not exactly TVAR. The source on page 18 also refers to TVAR and EPD as d…
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Flashcard 11 refers to interactive meeting not interactive rating
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No, you would still have a loss recovery component but you just wouldn't have to do any allocation since they are all onerous
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Well they are not doing the same thing but are rather the process that you need to undertake when there is an onerous group of contracts. At initial recognition, your loss is immediately recognized in the P&L (say 200), and at each subsequent pe…
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Yeah that is what I was referring to. Changes in discount rates (TVM) would flow into AOCI or directly into P&L so it won't have any affect on the CSM.
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* yeah you would exclude them, so insurance acquisition cash flows = 0. * Yes, as I mentioned in your previous question. Refer to section 5.5 in the CIA paper for LRC. * No, they are considered in other expenses. I think reading section 5.5 sh…
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Yes, that is correct. Non-directly attributable costs fall under the other expenses category and are not part of the LRC. As per section 5.5: "Only costs that are directly attributable to the portfolio of insurance contracts to which the group belo…
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yeah, the Loss recovery component should only be attributed to the proportion of grouped contracts that are onerous
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Yeah the actual MCT formula is in the MCT paper
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No, the MSA ratios are still under IFRS4
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PV(outflow - inflow). Although as I have mentioned in the past, the CAS has defined it as PV(inflow - outflow) in one of their papers
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When you have a reinsurance contract that covers an onerous group of contracts, you will have a loss recovery component. When you group contracts together for the sake of reinsurance, for example purchasing reinsurance on personal property, where pr…
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yeah - reinsurance held asset is the AIC/RC
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Yeah the risk adjustment for reinsurance held is not the same as for insurance contracts held. The source describes it succinctly as follows: * The RA for the insurance contracts issued represents the compensation that the entity requires for …
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Embedded derivatives are considered under IFRS9 -> contractual options are that are not embedded derivatives are considered in the cash flows. Looks like a typo to me
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Right - The contracts in the Excel file have already been "recognized". FAC would only not been considered in the LRC for unrecognized contracts
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Asset for Incurred Claims/ Remaining Coverage
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If reinsurance program has changed substantially, you should use gross and net. You can retroactively apply the new reinsurance terms on the gross triangle. I think what the wiki is mentioning here is that you cannot use net triangles directly, whi…
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This is not the right paper - CIA.IFRS17-1 is the paper you should be referring to. In any case, it is a typo, it should be "reinsurer" rather than "ceding insurer" @graham
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Glad you got it figured out
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CSM = Inflow - (outflow + RA). RA is negative for AIC/RC. But yes, the risk adjustment is supposed to reduce the recoverable for AIC/RC. I think you will be fine as you get that concept
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yup you are right
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Basically, it is just saying you cannot have a loss recovery component if you purchase reinsurance for an onerous group of contracts that are already recognized as onerous. You need to buy reinsurance before your group of contracts are recognized as…
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I think there is a fundamental issue with the Excel file. PAA excl LRC is **GROSS **of cancellations as per the insurance contracts paper. As to why that is the case, I think you will come to find that the standard is mostly applied at face value an…
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This whole section that you are highlighting is referring to the "expensing acquisition costs" immediately option. In the Excel file, the assumption (which most insurers take) is to incur expenses as revenue is earned. When you expense your acquisit…
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Conceptually, the way I see it is that the "true" LRC is represented by the GMA estimate. PAA is a simplification, which you can use as long as you are NOT onerous. So I don't see anything wrong with there being a negative LRC for PAA estimates, giv…
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1.That is correct. 2. AIC stands for Asset for incurred claims. Basically the receivables that you expect from reinsurance Yes, I think it will be fair to just use NII under IFRS17 for any MSA related questions
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Yup good catch - I have edited my comment. LC is supposed to be amortized just like the CSM
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Claim liabilities = IBNR + Case O/S Ultimate = IBNR + Case O/S + Paid