SAO Level up quiz
the answer to the question below shows (a). Should the answer be (e)?
Which section of the SAO displays this amount:
• Reserve for Unpaid Losses (Liabilities, Surplus and Other Funds page, Col 1, Line 1).
(a) Identification section
(b) Scope section
(c) Opinion section
(d) Relevant Comments section
(e) Exhibit A
(f) Exhibit B
Comments
Yes, you are correct, thanks! I changed the answer to (e) and thanked you in the green box under the question. If you'd like me to use a different nickname (like your initials), please let me know.
Your coworker asks you to identify if they should pursue comments about material adverse development on a company. They do not have the full statement, but they do know the following:
• The ratio of Company Action Level Capital to Net Loss Reserve = 35%
• The RBC Ratio is 250%
Which of the following is correct?
I'm having trouble locating the part about "The ratio of Company Action Level Capital to Net Loss Reserve = 35%" - what is the threshold for this point?
Take a look at a couple of possible solutions here:
so you are saying this is the bright-line test but that is:
10% x (net L & LAE reserves) > TAC – CAL
so does Company Action Level Capital to Net Loss Reserve = (TAC-CAL)/(net L & LAE reserves)
For reference, this is the link to the Bright Line Indicator Test: (which you have probably already read so this is for anyone else reading this post)
I don't think what you wrote is true algebraically because NLR cancels out of both sides and you're left with CAL = TAC - CAL, which is not true in general.
sorry I'm a bit lost on this one still, would you be able to explain what math/reasoning you used to get the answer: "Yes; pursue comments regarding MAD if the Appointed Actuary did not already address it."