CAS Exam 6C Spring 2019, Question 15
Study guide: Exam 6C
The following information is provided for a federally-regulated property and casualty insurance company as at December 31, 2018. All amounts are in thousands of dollars ($000s).
Incremental Paid
| AY* | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2015 | 8,500 | 2,000 | 500 | 250 |
| 2016 | 8,000 | 1,500 | 1,000 | |
| 2017 | 9,000 | 5,000 | ||
| 2018 | 10,000 |
Actuarial Present Value Ultimate
| AY* | 12 | 24 | 36 | 48 |
|---|---|---|---|---|
| 2015 | 16,000 | 16,500 | 17,250 | 17,250 |
| 2016 | 14,200 | 15,500 | 16,000 | |
| 2017 | 18,500 | 20,100 | ||
| 2018 | 20,250 |
* Accident year
Discounted excess/(deficiency) ratio:
| Calendar Year | Accident Years 2015 and Prior | Accident Years 2016 and Prior | Accident Years 2017 and Prior |
|---|---|---|---|
| 2016 | -4% | ||
| 2017 | -12% | -14% | |
| 2018 | -10% | -16% | -7% |
Other information:
- The investment yield is 2.5% for all years.
- The company started writing business in 2015.
Part a (0.75 points)
Calculate the investment income on unpaid claims for accident year 2015 in calendar year 2018.
Part b (1.25 points)
Calculate the cumulative discounted excess/(deficiency) ratio for accident year 2016 as at December 31, 2018.
Part c (0.5 points)
Analyze the discounted excess/(deficiency) ratio exhibit from the perspective of the Office of the Superintendent of Financial Institutions (OSFI).
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