Spring 2019 #17
One of the common mistakes for the 'Discounting Loss Reserves' was "Not stating the extend of possible loss reserve discounting for the SAP. For example, under SAP only tabular discounting allowed"
So there is no non-tabular discounting under SAP ever? The wiki mentions it is formulaic & capped.
Comments
See the following for our latest thinking on what the text says on this topic, and on this exam question in particular:
https://battleacts6us.ca/vanillaforum6us/discussion/605/statutory-loss-reserves-are-booked-at-their-nominal-undiscounted-value#latest
Hi, for the same item i) is the solution "GAAP: discounting of loss reserves is common" out dated? b/c GAAP allows for SAP discount rates, and SAP commonly don't discount, thank you
The text is not clear on this but the examiners' report accepted the answer that loss reserves under GAAP are commonly discounted. That answer should be acceptable even if it is outdated and/or wrong. You should be graded only on what is in the syllabus.
Hi are item ii and iii ceded losses under prospective and retroactive reinsurance treated the same under GAAP? IOW, are both under "reinsurance recoverable"? Thank you.
Items ii and iii are ceded loss reserves, and yes, they both fall into the "reinsurance recoverable on unpaid loss" asset.