R1 Miscellaneous assets
Hi,
in Od 19 Text material it shows R1 is composed by Miscellaneous assets (includes cash, cash equivalents, other short-term investments, nonadmitted collateral loans) [as shown here on the wiki page], yet on page 259 of the text it shows that the Miscellaneous assets has 0.003 RBC factor for cash, cash equiv, other , and 0.050 times admitted collateral loans and write-ins. I am confused which way it should be, admitted or non-admitted?
Many thanks!
Comments
This appears to be a contradiction in the Odomirok text. My guess is, the original list is correct and the "admitted" on p. 259 is a typo. In the original list, mortgage loan, which is a type of collateral loan, is itemized separately. So, I think mortgage loan is an admitted collateral loan and there are also non-admitted collateral loans being charged for.
The discrepancy isn't likely to impact the way to answer a question relevant to this. If there's a question asking for the categories of assets included in the R1 calculation, use the original list, including non-admitted collateral loans. For an R1 calculation question, they should provide the relevant charges, so that it will be evident what to do.
According to Page 9 of RBC proposal https://content.naic.org/sites/default/files/inline-files/01_RBC_Proposal_2021-08-P.pdf , the 5% should be applied to net admitted collateral loan (total - non-admitted).
Yes, I stand corrected. On page 244, the text says:
"R1 and R2 are risks associated with admitted invested assets . . . "
So, the list on page 254 must have it wrong. It is the admitted collateral loan that goes in.