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The difference between statutory and tax accounting's discounting of loss reserves most likely results in higher taxes for the period in question. However, the unwinding of this discount in future periods brings tax benefits, which are measured in D…
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You need to remove UW expenses to get to Income. It is not a part of TBEP, Graham just threw it in with TBEP to make sure it was removed in the resulting Income.
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You are right, this treatment is outdated. The calculation is now undertaken in Schedule F Part 3.
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It most likely goes under cash, like premium.
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UBI is "usage-based insurance." Usually Auto.
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It goes like this: Gross= Direct + Assumed, Direct = Net + Ceded. Your items 1 and 2 are correct, but things like "net and assumed" and "ceded and assumed" are not in common usage.
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Whether insurance price optimization violates the Clayton Antitrust Law would depend on factors such as: Market Power: If insurers with significant market power use price optimization to unfairly exclude competitors or maintain dominance in the m…
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A run-off agreement can be retroactive, prospective, or both, depending on the parties' intention. A novation usually replaces a party to the original contract. Retro/pros status depends on the underlying contract.
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Yes, correct.
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IEE allocations are performed both direct and net of reinsurance, in their respective parts.
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Correct.
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The difference is claims having occurred versus claims being yet to occur. With the former, you are only reinsuring reserving risk. They may be trying to acknowledge this in the separate accounting treatments.
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1401 is the write-in surplus line where it goes, instead of going into line 39, Surplus.
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If they ask you to calculate the bond size charge, they may expect you to know the weighting scheme for the bond size factor.
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Provision for reinsurance is like a reserve for reinsurance that may be uncollectible. It's a liability in that sense.
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Yes, it needs to be subtracted, to stay consistent with Graham's convention in his Sep 2023 post above.
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IRIS 4 text instructs to adjust surplus specifically this way. It makes sense. You need to take out surplus aid from both the starting and the ending surplus to get a comparison excluding surplus aid.
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There is nothing special about 2017-Spring-Q20-part b. They just failed to observe the mid-year convention in their answer.
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No, that's the industry retention.
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Graham has descriptions of both pros. and retro. reins. above. What in there makes you think retro. is not really considered as a valid reinsurance? Portfolio reinsurance is distinct from retro. reins.. From Odomirok: Portfolio reinsurance is …
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That must be in error.
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The dividend-received treatment is currently not covered in the syllabus.
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Here, "payable" means payable to reinsurer, because of the question's context. This is not an official AS line item.
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The 5mil criterion of certification is for industry total loss, not insurer's.
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If you see it mentioned in that way somewhere, it s in error there.
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I think rounding is performed to determine action level.
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Yes, it is applicable to both SAP and GAAP. Once it is established that there is risk transfer, the reinsurance accounting treatment is subject to the separate rules of SAP and GAAP.
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The problem gives both the 12M as Part 4 IBNR and the information related to the new IBNR requirement. So, using either should be acceptable. The answer key gives 12M as the only choice. I don't know if they would accept the latter.
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No, these are not aligned with where they were going with this question.
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Yes, I see the discrepancy in our two statements. Here is Graham's comment on this: This is a case where official syllabus readings don't quite line up and I don't know what the graders would do. If you don't take 50%, that should probably be mar…