notes to financial statemenets (odormirok) Flashcards
Notes to financial statements (direct involvement w/ actuary) CARD-PDR
- Change in (prior AY) incurred L&LAE
- Asbestos (environmental) reserves
- Reinsurance
- Discounting (reserves)
- Premium Deficiency Reserve (UEP not sufficient to cover losses)
Change in (prior AY) incurred L&LAE
importance
disclose (2)
- Important: impacts current CY UW income
- changes in multiple years = issue with reserving process
- Disclose: ∆ in prior AY incurred L&LAE
- reasons for ∆
Asbestos (environmental) reserves
importance
disclose (4)
- Important: causes adverse development
- Disclose: does exposure exist?
- 5 years of rsvs
- rsv methods
- LOB impacted
Reinsurance
importance
disclosures (4)
- Important: credit risk not shown on balance sheet, abusing surplus aid to inflate surplus? can lower B/S rsv
- Disclose: section A – unsecured (why unsecure? cat cause this? concentrated w/ 1 reinsurer?)
- Disclose: section B – disputed (why disputed? Is amt material? )
- Disclose: section D – uncollectible (why uncollectible? potentially more uncollectible?)
- Disclose: Commutations (reinsurer name, L&LAE each yr, EP each yr)
Premium Deficiency Reserve (means UEP not sufficient to cover losses)
importance
disclose
- Important: this note is only way to know if PDR exists (if PDR is recorded as UEP & not write-in liability)
- Disclose: investment income considered in calculating PDR?
- amount of PDR
Notes to financial statements (relevant to actuary) SHIES
- Summary of accounting principles
- High Deductibles (pay full claim & owed reimbursement for deductible)
- Intercompany pooling
- Events subsequent
- Structured Settlement (buy annuity from life ins co to pay losses)
Summary of accounting principles
disclose
- Important: none listed
- Disclose: source of rules
- exceptions to rules
High Deductibles (pay full claim & owed reimbursement for deductible)
importance
disclose
- Important: credit risk not shown on balance sheet
- Disclose: amt recorded
- amt billed but not collected
Intercompany pooling
importance
disclose
- Important: impacts Schedule F & Schedule P (P only shows pool members %s)
- Disclose: all details in pooling arrangement (lead co, participant cos., %s, state)
Events subsequent
importance
disclose (2)
- Important: occurred before BS was issued BUT after balance sheet date
- Disclose: Type I amt IF not reflected in balance sheet recognized (Foreseeable) conditions existed at balance sheet date
- Disclose: Type II amt IF not reflected in balance sheet & IF material NonRecognized (Unforeseeable) conditions DID NOT exist at balance sheet date
Structured Settlement (buy annuity from life ins co to pay losses)
importance
disclose (2)
- Important: credit risk not shown on balance sheet
- Disclose: total pmts from all life insurers for which liability still exists
- Disclose: insurer name & pmt amt (IF pmt > 1% of surplus)
What is run off agreement?
how is run off agreement recorded in financial statements?
run-off agreement: keep liability until x date or polices cancel + transfer book to another co
recorded: paid loss + decrease rsvs IF rsvs transferred > paid loss
