CAS Exam 6C Fall 2017, Question 19
Study guide: Exam 6C
The following information is available for a property and casualty insurance company as at December 31, 2016. All amounts are in thousands of dollars ($000s).
| Item | Value |
|---|---|
| Estimated undiscounted value of the commuted liability | 4,000 |
| Risk free rate | 2% |
| Required margin | 10% |
| Target capital to required capital ratio | 200% |
| Risk cost of capital | 10% |
Cumulative calendar year payment pattern:
| Age (Months) | % Paid |
|---|---|
| 12 | 50% |
| 24 | 100% |
Calculate the value of the commuted liability as at December 31, 2016.
Part a (1.75 points)
Answer this question and see the worked solution