CAS Exam 6C Spring 2017, Question 16
Study guide: Exam 6C
The following information is available for a property and casualty insurance company that writes only personal property insurance as at December 31, 2016. All amounts are in thousands of dollars ($000s).
Appointed Actuary's estimates
| Item | Value |
|---|---|
| Net Undiscounted Estimate | 810,000 |
| Net Discounted Estimate including PfADs | 816,200 |
| Discount Rate, including interest MfAD | 5% |
Calendar year payout pattern
| Year 1 | Year 2 | Year 3 | Year 4 |
|---|---|---|---|
| 60% | 25% | 10% | 5% |
Other information:
- All payments are made in the middle of the year.
- The net claim liabilities amount carried in the Annual Return is 820,000.
- The future income tax rate is 35%.
Part a (0.5 points)
Define the asset for future income taxes.
Part b (1.25 points)
Calculate the estimated effect of discounting the asset for future income taxes.
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