Spring 2019 #21 b

The question states: "John Doe, Chief Information Officer, provided data for the Appointed Actuary's analysis as well as the December 31, 2017 Annual Statement excerpted below". When I read this prompt, I assumed the date provided applied to the Annual Statement but made no assumption that it applied to the data provided.

The examiner's report lists one requirement for full credit as the "Review data [I think this meant date] through which material information is known to the actuary is included in forming the opinion". I missed this because I thought the date provided applied only to the Annual Statement.

Also, they don't make any mention about whether the data was reviewed for reasonability or reconciled to Schedule P in the prompt. But those statements were required as part of the answer.

I think I am excessively parsing this and similar questions. For these questions, should I just assume the hypothetical actuary did everything correctly and focus on listing all SAO requirements for the referenced section to demonstrate that I know those?


  • I think you might indeed be over-parsing this question. Exam questions do sometimes have subtleties they want you to pick up on but here I think they just wanted to see if you could provide reasonable wording for the SCOPE section related to data relied upon by the actuary. It doesn't look like they were trying to trip you up with dates.

    This is somewhat similar to a question from 2015 except for the 2015 question you didn't actually have to supply the wording, just the contents of the disclosure section:

    I think the examiner's report did mean review "data" rather than review "date". The AA is supposed to review the "data" that has been provided and that could include the dates to make sure the information is current and relevant.

    You have the right idea in focusing on the SAO requirements in the referenced section. (I would hesitate in making assumptions about what the actuary has done or not done but I see what you mean here - you kind of have to assume the actuary did everything correctly or you couldn't provide the wording.) This is basically a memory question but they didn't want to just ask you to reproduce a list (as they did in the 2015 question) so they threw in the CIO John Doe and few numbers from the balance sheet.

    In any case, the best way to get a feel for how to answer these SAO questions is to do the old exam problems. I'm not sure where you are in this but some things that might trip you up at the beginning will seem easy once you've gone back a few years and see how the questions tend to repeat.

  • Thanks, Graham, for the related question and the clarification about data vs. date.

    This morning I worked on Fall 2014, question 23.b, and noticed that the Examiner's Report did expect exam takers to make up reasons why there was adverse development in 3 of the last 5 years. They listed made-up answers about specific lines of business that weren't mentioned in the problem (asbestos and development on Worker's Comp). They specifically stated that "not including reasons for adverse development" was a common error.

    I am taking your advice and continuing to work through all the SAO questions... hopefully that will help me see what Alice's arch-enemy is really asking for with all of these questions.

  • Hi @peteabbate

    I don't think it was fair for the graders to expect you to just make something up. I know the AA is supposed to explain the adverse development but if I'd been taking the exam, I would have written that an explanation was required but that we were weren't provided with enough information to be specific. If the graders simply wanted to know whether you knew an explanation was required then that should have been sufficient but who knows for sure.

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