AOS Content

mnrber

COPLFR states that AOS parts A/B should contain the 'unpaid claim' estimates. Are these only the L&LAE reserves? What about UEPR, PDR... all the other reserves that are discussed throughout the SAO?

(I hope this question doesn't mean I'm lacking some fundamental understanding of the exam material)

graham

It's generally just the L&LAE reserves. The specific items covered would be described in the SCOPE section of the SAO. The AOS just provides some extra (non-public) information on what was already discussed in the SAO. For Mr. Smith's SAO and AOS example from chapters 16 and 17 of Odomirok, here's an excerpt from the SCOPE:

• I have not reviewed the Company’s unearned premium reserves, nor have I performed any analysis to determine whether a premium deficiency reserve is needed to supplement the unearned premium reserves reported by the Company.

Note that UEPR is generally not an actuarial estimate - it's a calculation based on earned premium and the earning pattern. PDR is discussed in "Notes to the Financial Statements". Here is the beginning of chapter 10 from Odomirok:

mnrber

Thanks!

downthesun

What exactly is the information provided in the Actuarial Opinion Summary that makes the document confidential? I'm not seeing anything that's proprietary. Is it the appointed actuary's range of estimates?

graham

AOS shows the actuary's estimates whereas the SAO does not. This includes the point-estimate and ranges if the actuary computed ranges in their analysis. The SAO shows only the booked amounts so the reader of the SAO doesn't know where in the actuary's range the booked values lie and management may not want that information to be public.

Also, the AOS may have details that go beyond what's in the Relevant Comments section of the SAO. This could include explanations for adverse development that the insurer may not want to be made public.