CAS Exam 6C Fall 2015, Question 26
Study guide: Exam 6C
An actuary is considering the following options for estimating policy liabilities:
- Option A: On a gross and net basis directly; while the ceded policy liabilities will be calculated as the difference between the gross and net.
- Option B: On a gross and ceded basis directly; while the net policy liabilities will be calculated as the difference between the gross and ceded.
Part a (2 points)
Identify and briefly describe four considerations that an actuary should contemplate when selecting one of the above options.
Part b (0.25 points)
Briefly describe the difference between present value and actuarial present value.
Answer this question and see the worked solution