Spring 2019 Question 16 part b

Hello,
I just have a quick question on using company data to determine a payment pattern. I know in the tax section it was stated that insurers can no longer use their own schedule p data for determining payment patterns. Does this only apply for the purposes of taxes or is it for all discounting? I just ask because one of the solutions to determining the timing and magnitude of cash flows is to use LDFs from the insurer's schedule P. This makes me think it is just for tax purposes but I just want to confirm.

Thank you

Comments

  • The statement in the tax section is meant only for tax purposes. Own Schedule P is still an option in deriving cash flows for GAAP fair value.

    Note that these involve determining cash flows, not their discounting. Federal tax and GAAP fair value each have their own prescriptions for the discount rate.

  • edited June 2023

    Hi, per text, a negative goodwill should "1st offset the book value of the acquired non-current assets", but CAS solution for A allocated it to income directly, is the solution outdated? Thank you in advance

  • I'm sorry, I don't think I understand your question. You're saying the solution to part (a) "allocated negative goodwill to income directly?" I don't see that anywhere in the solution.

    (Part (a) was just asking you to list the components required to estimate the fair value of liabilities under purchase GAAP.)

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