Difference between revisions of "RBC"
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On Alice's first day of work as an actuarial intern, her mean boss dumped a stack of financial statements on her desk and told her to find out whether the company was healthy. But before she could ask him anything, he was already down the hall issuing orders to someone else. ''"Jackass,"'' she thought. Poor Alice had no idea what to do. Fortunately the intern in the next cubicle overheard and peeked over the cubicle wall. | On Alice's first day of work as an actuarial intern, her mean boss dumped a stack of financial statements on her desk and told her to find out whether the company was healthy. But before she could ask him anything, he was already down the hall issuing orders to someone else. ''"Jackass,"'' she thought. Poor Alice had no idea what to do. Fortunately the intern in the next cubicle overheard and peeked over the cubicle wall. | ||
− | : "Just calculate the RBC ratio," her new friend said. "It's all in Odomirok. The boss likes to haze the newbies on their first day, but I can help you. We | + | : "Just calculate the RBC ratio," her new friend said. "It's all in Odomirok. The boss likes to haze the newbies on their first day, but I can help you. We'll <span style="color: red;">'''tackle'''</span> it together." |
So Alice and her cubicle-mate spent an hour pulling the relevant information from the financial statements and here is what Alice learned: | So Alice and her cubicle-mate spent an hour pulling the relevant information from the financial statements and here is what Alice learned: |
Revision as of 20:36, 21 November 2018
Contents
Pop Quiz
BattleTable
Based on past exams, the main things you need to know (in rough order of importance) are:
reference part (a) part (b) part (c) part (d) E (2018.Spring #18) calculate:
- change in RBC chargerapid premium growth:
- impact on RBCE (2017.Fall #17) calculate:
- RBC ratiocalculate:
- RBC action levelE (2017.Fall #18) financial health:
- use of RBC ratiosR0 RBC charge:
- difference vs R1,2,3,4,5RBC vs IRIS:
- similarity & differenceE (2017.Spring #19) calculate:
- total RBCcalculate:
- RBC RAL1RAL actions:
- insurer & regulatorE (2016.Fall #16) RBC risk categories:
- identify 2RBC purpose:
- for regulatorE (2016.Fall #17) rbc require E (2015.Fall #17) r1r2 E (2015.Spring #19) written E (2015.Spring #25) multiple areas E (2014.Fall #18) multiple areas error in exam question see pg 607 in pdf E (2014.Spring #20) multiple areas E (2013.Fall #21) rbc require E (2012.Fall #14) see Odo 8-9 asset risk of RBC E (2012.Fall #20) calc RBC see IRIS RBC vs IRIS growth charge E (2012.Fall #24) multiple papers (Bloom's Taxonomy)
- 1 RAL stands for Regulatory Action Level
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In Plain English!
Alice's 1st Day
On Alice's first day of work as an actuarial intern, her mean boss dumped a stack of financial statements on her desk and told her to find out whether the company was healthy. But before she could ask him anything, he was already down the hall issuing orders to someone else. "Jackass," she thought. Poor Alice had no idea what to do. Fortunately the intern in the next cubicle overheard and peeked over the cubicle wall.
- "Just calculate the RBC ratio," her new friend said. "It's all in Odomirok. The boss likes to haze the newbies on their first day, but I can help you. We'll tackle it together."
So Alice and her cubicle-mate spent an hour pulling the relevant information from the financial statements and here is what Alice learned:
Formula: RBC ratio = TAC / ACL (sounds like tackle)
- TAC = Total Adjusted Capital = 31,024,000
- ACL = Authorized Control Level = 5,552,182
- ==> RBC ratio = 31,024,000 / 5,552,182 = 559%
Ok, so far, so good, but WTF does 559% mean? Is that good or bad? (The following table appears near the end of chapter 19 of Odomirok)
action level threshold insurance dept action company action CAL (Company Action Level) 200% none (initially) must submit action plan to meet RBC standards RAL (Regulatory Action Level) 150% commissioner may take corrective action must submit action plan to meet RBC standards ACL (Authorized Control Level) 100% commissioner may take control of company none (initially) MCL (Mandatory Control Level) 70% commissioner must take control of company none (initially)
The RBC ratio of 559% for Alice's company is way above the CAL threshold, so it looks like the company is doing really well. What a great first day of work for Alice! Go home and relax!
Alice's 2nd Day
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BattleCodes
Memorize:
Conceptual:
Calculational: