CAS Exam 6C Fall 2015, Question 17
Study guide: Exam 6C
The following information is available for a Canadian property and casualty insurance company as of December 31, 2014. All amounts are in thousands of dollars ($000).
Appointed Actuary's Claim Liability Estimates:
| Item | Amount |
|---|---|
| Net Undiscounted Estimate | 5,500 |
| Net Discounted Estimate Excluding PfADs | 4,700 |
| PfAD – Investment Return Rate | 150 |
| PfAD – Claims Development | 470 |
| PfAD – Reinsurance Recovery | 50 |
Excerpts from Annual Return page 20.10
| Item | Amount |
|---|---|
| Cash | 30 |
| Total Investments | 12,600 |
| Unearned Premiums - Recoverable | 875 |
| Unpaid Claims & Adjustment Expenses - Recoverable | 5,650 |
| Other Recoverable on Unpaid Claims* | 200 |
*Comprised solely of Salvage & Subrogation Recoverable
Excerpts from Annual Return page 20.20
| Item | Amount |
|---|---|
| Borrowed Money & Accrued Interest | 100 |
| Agents & Brokers – Payables | 500 |
| Policyholder – Payables | 100 |
| Unearned Premiums | 4,150 |
| Unpaid Claims & Adjustment Expenses | 12,000 |
Future Income Tax Rate is 35%.
Calculate the estimated effect of discounting the asset for future income taxes.
Part a (1.25 points)
No current syllabus covers this question; it is kept for the record.
Answer this question and see the worked solution
Concepts tested
- Future Income Tax Asset
- Appointed Actuary's Report
- Margin for Adverse Deviations
- Canadian Annual Return
- Loss Reserve Discounting