IRIS 7 Recalc, if IRIS 4 is unusual
How to Recalculate IRIS 7, if IRIS 4 is unusual?
IRIS 7 = (Current Year's Surplus - Prior Year's Surplus)/ Prior Year's Surplus
According to NAIC, the previous year's Surplus should also be adjusted. The numerator doesn't need to be recalculated.
So do we use Unadjusted IRIS 7 / (1 - current year's surplus aid ratio), assuming the prior year's surplus aid is the same as the current year's surplus aid? I don't think this makes perfect sense because the prior year's surplus aid ratio should not be the same as the current year's surplus aid ratio. Maybe just an approximate way.
Comments
And since IRIS 7 needs to be recalculated, why does IRIS 8 not need to be recalculated? IRIS 8 = (Current Year's Adjusted Surplus - Prior year's surplus) / Prior Year's Surplus.
It has the same denominator as IRIS 7.
I agree that in the prescribed recalculation, they are assuming current and prior surplus aid to be the same.
I also agree that IRIS 8 should be similarly recalculated, even if it is not listed among the ratios to be recalculated when surplus aid ratio is unusual. That said, I would stick with the text and not give IRIS 8, if the ratios to be recalced are asked point-blank.
Hi, I found an older post discussing the same question.
https://www.battleacts6us.ca/vanillaforum6us/discussion/comment/391#Comment_391
I will go by this post.
In 2014.S.19c, they calculate the surplus aid both for current and prior year, and use them in the adjustment, instead of using the shortcut mentioned in the text. I would think the text shortcut would be acceptable as well, and especially where data to calc prior year surplus aid is not given.