CAS Exam 6C Spring 2014, Question 25
Study guide: Exam 6C
The Dynamic Capital Adequacy Testing (DCAT) report for a federally regulated Canadian property and casualty insurer was produced based on data as of December 31, 2012 and a business plan as of June 30, 2013. On September 1, 2013, before the DCAT report was filed with OSFI, management decided to accelerate growth in the Ontario automobile market.
Part a (0.5 points)
Describe any actions required by the actuary before filing the DCAT report with OSFI.
Part b (0.5 points)
The fast growth in the Ontario automobile market may create pressure on the company's profitability for the next few years and the company directors plan to inject capital in 2014. Explain whether or not it is acceptable practice to include a capital injection in the DCAT base scenario.
Part c (0.5 points)
A premium volume increase adverse scenario was created with assumptions that would require a capital injection. Explain whether or not it is acceptable practice to include a capital injection in this adverse scenario.
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