CAS Exam 6C Spring 2017, Question 11
Study guide: Exam 6C
You are given the following information for the Property reinsurance business of a company as at December 31, 2016. The company has no other business. All amounts are in thousands of dollars ($000s).
From Actuarial Valuation Report
Gross of Reinsurance
Cumulative Paid Claims
| Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 2,500 | 5,000 | 10,000 | 11,000 |
| 2014 | 3,700 | 5,500 | 9,000 | |
| 2015 | 2,800 | 6,000 | ||
| 2016 | 3,000 |
Ultimate Claims (Undiscounted)
| Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 10,000 | 12,000 | 11,500 | 11,500 |
| 2014 | 10,000 | 10,000 | 10,000 | |
| 2015 | 11,000 | 11,500 | ||
| 2016 | 12,000 |
Effect of Discounting and PFAD
| Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 113 | 206 | 36 | 18 |
| 2014 | 95 | 132 | 24 | |
| 2015 | 123 | 162 | ||
| 2016 | 135 |
Net of Reinsurance
Cumulative Paid Claims
| Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 1,250 | 2,500 | 5,000 | 5,500 |
| 2014 | 1,850 | 2,750 | 4,500 | |
| 2015 | 1,400 | 3,000 | ||
| 2016 | 1,500 |
Ultimate Claims (Undiscounted)
| Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 5,000 | 6,000 | 5,750 | 5,750 |
| 2014 | 5,000 | 5,000 | 5,000 | |
| 2015 | 5,500 | 5,750 | ||
| 2016 | 6,000 |
Effect of Discounting and PFAD
| Year | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2013 | 417 | 445 | 91 | 34 |
| 2014 | 350 | 286 | 61 | |
| 2015 | 456 | 349 | ||
| 2016 | 500 |
From Schedule 10.60
The investment yield for the year ended December 31, 2016 is 3%.
From Schedule 60.30
Claims and Adjustment Expenses Paid – Current Year
| Class of Insurance | Direct | Reinsurance Assumed | Reinsurance Ceded | Net |
|---|---|---|---|---|
| Property | A | B | C | D |
Provision for Unpaid Claims (Including Unreported) and Adjustment Expenses – Current Year
| Class of Insurance | Direct | Reinsurance Assumed | Reinsurance Ceded | Net |
|---|---|---|---|---|
| Property | E | F | G | H |
Margin or Deficiency for Unpaid Claims at Prior Year End
| Class of Insurance | Net Provision for Prior Year-End | Net Amount Paid During the Year for Claims of Prior Years | Investment Income on Unpaid Claims of Prior Years | Net Provision for Claims of Prior Years | Margin (Deficiency) |
|---|---|---|---|---|---|
| Property | I | J | K | L | M |
Calculate the amounts in A to M in the Schedule 60.30 above.
Part a (3.25 points)
Answer this question and see the worked solution
Concepts tested
- Canadian Annual Return
- Excess (Deficiency) Ratio
- Unpaid Claims
- Loss Reserve Discounting
- Reinsurance Accounting
- Reinsurance Contract Liabilities