CAS Exam 6C Spring 2014, Question 22
Study guide: Exam 6C
In A.M. Best's Capital Adequacy Ratio (BCAR) model, the required capital can be divided into seven components. Two of the components are the loss and loss-adjustment expense reserves factor and the net premiums written factor.
The Office of the Superintendent of Financial Institutions (OSFI) uses a risk-based formula to calculate the required capital.
Part a (1 point)
The BCAR model includes several adjustments in the calculation of loss and loss-adjustment expense reserves (B5) factor. Identify four adjustments that are not included in OSFI's formula.
Part b (0.5 points)
Identify two differences between BCAR's net premiums written factor and that of OSFI's formula.
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