S2014 Q20
I have a few questions from this example:
1. The first table says everything is in thousands, so doesn't the final R3 charge come out to 1,116,000? Because it's 1116*1000?
2. Are we expected to calculate the inequality to determine if the Reins Recoverables charge should be split between R3 and R4? This inequality isn't mentioned in the examiner's report.
3. Are we expected to assume aff domestic insurers are subject to RBC requirements? If so, when would an affiliate insurer be included in R2 and not R0?
Comments
Yes, the answer was given in thousands.
There is a particular paragraph in the wiki that deals with this issue in this exam question (R3 with intro to R4):
https://battleacts6us.ca/wiki6us/Odomirok.19-RBC#Week_2:Day_3.28R3_with_intro_to_R4.29
https://battleacts6us.ca/wiki6us/Odomirok.19-RBC#Alice.27s_5th_Day_.28R0_and_Another_Exam_Problem.29
Subsidiary and affiliated insurance companies are only considered within R0 if they are U.S. domiciled entities subject to RBC, or if they are alien insurers (foreign to the U.S.).
So, they go in R2 otherwise.
for the RBC requirement - the answer does not include the 3% increase for operational risk, is that because this is an older question?
Yes, that is correct.
Where is the request that 1/2 of the reinsurance charge should be removed from R3? I can't find it anywhere.
That adjustment is made, because reinsurance charge gets split 50-50 between R3 and R4.
https://battleacts6us.ca/wiki6us/Odomirok.19-RBC#Week_2:Day_3.28R3_with_intro_to_R4.29:~:text=know%20the%20trick%3A-,E%20(2014.Spring%20%2320),RBC%20factors%20they%20made%20an%20adjustment%20for%20reinsurance.%20That%27s%20the%20trick.,-R3%20Trick
Ohh got it. I hadn't got to that part yet. Thanks!
Sure, good luck.