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This is not necessarily true. UEP - DAC can be < 0
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I think Graham is saying that the aforementioned 3 policies are eligible for expedited approval UNLESS they are written by the FA
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Yes you are right. You would need to subtract the LRC ex LC which is (UEP - DAC). I will inform Graham
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Yes, you are correct
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Yes, it will be 0 at initial recognition
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In general assessing means collecting contributions here and would be directed at participating insurers. Assessments are meant to cover for insolvent insurers
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To be honest, the CAS will never ask you to do it using method 2 because it's only explained conceptually and I would definitely not spend too much time on this.
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Yes one of them will always be 0 but only under the GMA approach. I guess you can think of it in that it is similar to the DPAC and premium deficiency. For non-onerous contracts under the PAA approach, you would not need to calculate a CSM becaus…
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If we are not charging the risk based premium, that would imply we are charging less than the expected losses + expenses for an associated risk. In the long run, this is not financially sustainable and the plan will eventually go bankrupt
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Hi, So here's my take on it. It's important for PAA because if you are a non onerous group under PAA, you would not have to calculate the loss component. However, any of the above considerations could make you onerous which would then mean you'd …
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I think this would go under the expense section. Less DPAE = more expenses (Generally although not always)
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Hi, Formula 1: LRC under GMA approach Formula 2: LRC under PAA simplification You would only be able to use formula 2 for the LRC if you meet the PAA eligibility test for LRC or the prescribed conditions. If not,(ex. policies with duration &g…
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Okay, I see what you mean; * Option A is more equitable if Overland Flood is mandatory because everyone has to provide flood insurance, so we shouldn't penalize insurers who have more exposure to flood because their hands are tied even if they …
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Okay so I've thought about it and went back to the source material to refresh my memory. My initial answer is not correct. Basically what we have is that Future reinsurance is actually: * Expected reinsurance costs based on anticipated contract…
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Hi, This is not necessarily true. As an example, DPAE could decrease if your ELR in the future period increases, while your expenses remain the same. Referring to the example in this exam directly, DPAE calculated by the actuary will decrease …
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The DPAE is an asset that recognizes prepaid expenses over the policy period as long as these costs are recoverable from the equity in the net UPR. A lower DPAE to put it simply means there is less "profit" in the UEP. If you have negative equity …
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Do you mean why we need to subtract future reinsurance? This is because we expect there to be a "cost" to have reinsurance on the unearned portion of the premium. Basically what we expect to receive from a reinsurer is less than the premium we pay. …
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I think based strictly speaking on the source text, Net Investment Income does include realized gains (MSA text in the study kit, page 11). The wiki is correct. This discussion is more of trying to get a handle/ make sense of the CAS wordings. How…
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Hi, The grid pool exists because of the cap that is imposed by Alberta on your charged premium which leads to some risks being charged less than what they should theoretically be charged. Instead of getting charged their commercial premium, they …
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I'm looking at the exam and am unsure where it mentions option A is mandatory? This question is not about equity for the insured
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No this method is not correct. The 0.555 and 0.444 is the weight that you would assign to the total unpaid. Your denominator should be the total discounted unpaid. This would be the correct formula for MacD: ((0.5 x (3500+0.555x20000)/1.02^0.5) + …
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So HTM and AFS were on a previous paper that has since been removed. In general, when calculating the discount rate for unpaid claims, you would do a Market value-duration weighted calculation for the overall portfolio yield. IFRS17 discounting is a…
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You are right. Net investment income considers realized gains/losses while investment income does not. Its made clear on the MSA report guide in the study kit, page 11
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Hi, Yes Graham mentioned that the IBC Flood 2016 indeed refers to The financial management of Flood - 2015
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Hi, Claims adjudication here refers to the costs associated with determining how much the reinsurer needs to pay for a claim. Service components are stuff related to providing insurance services i.e. claims handling, customer support, etc...
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No as far as I am ware the FA only deals with auto insurance As per their vision: Facility Association is recognized as an essential component of the Canadian P&C insurance industry, supporting Canadians and the Canadian economy through its hig…
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Hi, No premium would be included in FCFs. FCFs are defined as the PV of future cash flows + a risk adjustment for non financial risk. In current standards, that would mean it is: Expenses + Claims - Premiums + PFADs + Discounting. Yes onerous in …
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Hi, Yes but I wouldn't expect it to be tested. You would weigh with the Market Value
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Hi, Referring to Auto here. 2 year terms for Auto policies are an option in Quebec so you wouldn't be able to automatically use PAA for QC Auto
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Yes, investment income = Realized Capital gains + interest + dividends - Investment Expense. You are right about the Unrealized gains also