Capital Mnemonics Flashcards
Features of a good model
VAN FUR UP CAVE
Valid
Adequately documented
Not overly complex
Flexible
Understandable by managers
Reflect risk profile
Uncertainty should be verifiable
Parameters identified and justified
Complete
Appropriate parameters
Verifiable
Easy to communicate results
When to allow for diversification
SPAR SPA
Solvency assessment
Performance measurement
Asset allocation
RI purchasing
Strategy setting
Pricing
Assessing enterprise-level risks
Key risk types
CLOG RUM
Credit
Liquidity
Operational
Group
Reserve
Underwriting/ Insurance
Market
Assumptions needed for a capital model
REDUCE DOG CRITIC
RI share of ultimate claims and RI bad debt
Exhaustion of reinsurance and reinsurer
Downgrade assumptions
Ultimate gross claims (including CHE)
Cede premiums
Expenses
Dividends
Operational losses
Gross written premium
Catastrophe claims
Reserve movements (gross), by COB
Inflation
Tax
Investment returns, split by Asse class
Claims payment profiles
Data needed for capital modelling
CRUDE CALF PUP
Claims payment profiles
RI programmes
Unpaid gross claims
Details of operational risks
Expenses
Credit exposures
Asset values
Large losses
Future reinsurance costs
Planned premiums (gross and net)
Unexpired premiums (gross and net)
Planned RI programmes
