timed out BattleActs100

Commutations: Tax Effect (EASY version)

myID_+ priorDate_+ record_+ WET_+ fadeFactor_

Calculate the change in taxable income for both the insurer and reinsurer due to the commutation.

  current score:
0.000
primary insurer change in taxable income
reinsurer change in taxable income
quota-share % xx%
commutation price xxx,xxx
discount factor - primary insurer 0.000
discount factor - reinsurer 0.000
REINSURER'S carried loss reserves (prior to commutation) are higher than the INSURED'S carried (ceded) reserves by xx%
primary insurer DIRECT (gross) loss reserve x,xxx,xxx

Formulas

change in taxable income for primary insurer
= price – (pR-c) x d1

change in taxable income for reinsurer insurer
= (reR-g) x d2 – price

Notation

price
= commutation price

pR-c
= CEDED carried reserve for primary insurer BEFORE commutation

reR-g
= GROSS carried reserve for reinsurer BEFORE commutation

d1
= discount factor for primary insurer

d2
= discount factor for reinsurer

Solution:
primary insurer change in taxable income ----
pR-c =         ----
reinsurer change in taxable income ----
reR-g =         ----