Fall 2014 Q 21

emelndalgicemelndalgic
in COPLFR.SAO

In part c, what is the reason for the general disclosures regarding pools not being accepted? I would guess that they are not accepted because they are looking for disclosures that are required specifically because it's work of others, but that doesn't seem likely.

Comments

  • emelndalgicemelndalgic

    I meant not likely based on other answers that did get accepted.

  • grahamgraham

    I suspect that general pool information wasn't accepted because that information by itself doesn't relate directly to the opinion. For example, just giving the pooling percentages wouldn't tell you anything about the validity of the reserving methods or adequacy of the reserves. The pooling percentages may be part of such calculations, but by themselves don't tell you anything that helps you understand and have confidence in the overall opinion.

    (I don't think the reason for not accepting general pool information has anything to do with "work of others" in this case.)

  • emelndalgicemelndalgic

    OK, makes sense

  • emorchard97emorchard97

    This is several years removed from the original post, but would it be correct to say those general disclosures are items disclosed in the SCOPE section, while they asked for items disclosed in the RELEVANT COMMENTS section, therefore the general disclosures weren't accepted answers?

  • grahamgraham

    Yes, I believe your statement is correct. Based on the source text, here's a concise summary of the disclosure items for the SCOPE and RELEVANT COMMENTS sections. The relevant comments section is more open-ended because it depends on context, but there are certain things that must be included in the scope section.

    SCOPE Section disclosures in the SAO should include:

    • Reserve items upon which the Appointed Actuary is providing an opinion.
    • Basis for the presentation of those reserve items.
    • The "review date" as defined in ASOP No. 36.
    • Details about data reliance, including who provided the data and reconciliation to Schedule P, Part 1 of the Company’s Annual Statement.
    • Disclosure of participation in intercompany pooling if applicable, including a description of the pool, lead company identification, and a listing of all companies with their state of domicile and pooling percentages.

    RELEVANT COMMENTS Section disclosures in the SAO should be reserved for:

    • Any additional relevant observations or explanations that do not fall within the identification, scope, or opinion sections. This could include explanations for any significant changes in actuarial assumptions, methods, or unusual circumstances that impacted the actuarial opinion.
    • Material inconsistencies or reservations about the data used in forming the opinion that couldn’t be resolved satisfactorily.
    • Situations where the Appointed Actuary believes additional context or explanation is necessary to fully understand the scope or basis of the opinion given.
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