CAS Exam 6C Fall 2015, Question 13
Study guide: Exam 6C
The following information is available from the December 31, 2014 Appointed Actuary's Report for a Canadian property and casualty insurance company. All amounts are in thousands of dollars ($000s).
Incremental Paid Loss and ALAE
| Accident Year | 12 months | 24 months | 36 months | 48 months |
|---|---|---|---|---|
| 2011 | 88,000 | 24,000 | 18,000 | 8,000 |
| 2012 | 90,000 | 34,000 | ? | |
| 2013 | 97,000 | 40,000 | ||
| 2014 | 110,000 |
Discounted Outstanding Loss and ALAE
| Accident Year | 12 months | 24 months | 36 months | 48 months |
|---|---|---|---|---|
| 2011 | 86,000 | 58,000 | 34,000 | 20,000 |
| 2012 | 95,000 | 59,000 | 43,000 | |
| 2013 | 110,000 | 72,000 | ||
| 2014 | 121,000 |
The annual yield is 5%.
The cumulative excess on a discounted basis for Accident Year 2012 as of December 31, 2014 is exactly the same as the amount paid in 2014 on Accident Year 2012 claims.
Part a (1.75 points)
Calculate the cumulative excess for Accident Year 2012 as of December 31, 2014.
Part b (0.25 points)
Calculate the cumulative excess ratio for Accident Year 2012 as of December 31, 2014.
Part c (0.5 points)
Briefly describe the two approaches which account for the time value in money when evaluating the runoff of claims liabilities.
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