Sure. If you haven't done so, it will help to review the practice template for calculating the IRIS 4 ratio. This is the first BattleCard in quiz 1 from the wiki article:
This exam problem is just like the practice template EXCEPT for one piece of the surplus aid formula. The practice template gives you the single value of ceded UEPR to non-affiliates, but in the exam problem you have to sum all 8 values they provide for UEPR for 2012. The result is 54.4m
You can see the full formula for IRIS 4 (or for any of the IRIS ratios) in the wiki article by clicking on the green "F" in the first column of the formula tables. This will show the relevant page from the source reading.
Let me know if that doesn't completely answer your question.
Remember: You have to practice the IRIS calculations many times over using the practice templates that are available through the quizzes. And then many of these old exam problems will seem easier. If you're already doing that, then you're on the right track!
How would I know if those payments were to non-affiliates? The question only listed 2 lines to non-affiliates, should I assume that unearned premium is to non-affiliates unless stated otherwise?
Generally, a pool cannot be an affiliate of a single company. For the last two items, you can note that you are assuming they are non-affiliates in your answer.
is this question a bit outdated? - I thought unauthorized was not included in the surplus aid unless they are certified or reciprocal jurisdictions
or are we just assuming the unauthorized are certified or reciprocal jurisdictions?
It is true that "certified" and "reciprocal jurisdiction" are types associated with "unauthorized" reinsurers. Nevertheless, to me, this reads like all four types are to be included. So, ceded uep of unauthorized reinsurers are to be used in the formula. That's why I don't think the question is outdated.
I am seeing mixed information online regarding if voluntary pools would be affiliated or unaffiliated. Based on this problem, the answer took voluntary pools as unaffiliated -- is this always the case for this exam?
the answer states Surplus Aid = Estimated reinsurance commission rate x unearned premium on reinsurance ceded to non‐affiliates. However, why it is using the total unearned premium for the calculation? Or is it assuming all UEP is ceded (which looks unreasonable to me) ?
The given UEP figures are an extract from Schedule F. You can tell that they are ceded by their categories, which depict different kinds of reinsurers.
Comments
Sure. If you haven't done so, it will help to review the practice template for calculating the IRIS 4 ratio. This is the first BattleCard in quiz 1 from the wiki article:
This exam problem is just like the practice template EXCEPT for one piece of the surplus aid formula. The practice template gives you the single value of ceded UEPR to non-affiliates, but in the exam problem you have to sum all 8 values they provide for UEPR for 2012. The result is 54.4m
You can see the full formula for IRIS 4 (or for any of the IRIS ratios) in the wiki article by clicking on the green "F" in the first column of the formula tables. This will show the relevant page from the source reading.
Let me know if that doesn't completely answer your question.
Remember: You have to practice the IRIS calculations many times over using the practice templates that are available through the quizzes. And then many of these old exam problems will seem easier. If you're already doing that, then you're on the right track!
How would I know if those payments were to non-affiliates? The question only listed 2 lines to non-affiliates, should I assume that unearned premium is to non-affiliates unless stated otherwise?
Generally, a pool cannot be an affiliate of a single company. For the last two items, you can note that you are assuming they are non-affiliates in your answer.
is this question a bit outdated? - I thought unauthorized was not included in the surplus aid unless they are certified or reciprocal jurisdictions
or are we just assuming the unauthorized are certified or reciprocal jurisdictions?
NAIC.IRIS definition for IRIS Ratio 4 gives the following types of reinsurance companies to be included in the ceded unearned premium total:
Authorized, Unauthorized, Certified, & Reciprocal Jurisdiction.
It is true that "certified" and "reciprocal jurisdiction" are types associated with "unauthorized" reinsurers. Nevertheless, to me, this reads like all four types are to be included. So, ceded uep of unauthorized reinsurers are to be used in the formula. That's why I don't think the question is outdated.
https://battleacts6us.ca/pdf/IRIS_04_v2.pdf
thank you, I must have missed Unauthorized when writing my notes!
Sure, good luck.
I am seeing mixed information online regarding if voluntary pools would be affiliated or unaffiliated. Based on this problem, the answer took voluntary pools as unaffiliated -- is this always the case for this exam?
Yes, because IRIS 4 formula puts voluntary pools under unaffiliated.
the answer states Surplus Aid = Estimated reinsurance commission rate x unearned premium on reinsurance ceded to non‐affiliates. However, why it is using the total unearned premium for the calculation? Or is it assuming all UEP is ceded (which looks unreasonable to me) ?
The given UEP figures are an extract from Schedule F. You can tell that they are ceded by their categories, which depict different kinds of reinsurers.
in part c), why do we need to also remove the surplus aid on the prior year's surplus if calculating IRIS 7?
IRIS 4 text instructs to adjust surplus specifically this way.
It makes sense. You need to take out surplus aid from both the starting and the ending surplus to get a comparison excluding surplus aid.