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Exam 6 > OSFI. Memo AA > Flashcards

OSFI. Memo AA Flashcards

1
Q

who sets the requirements of AAR and what is the relevant legislation?

A
  • OSFI sets the requirements
  • the governing legislation is ICA
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2
Q

is the AAR part of an insurer’s annual return?

A

yes, it is a statutory requirement

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3
Q

briefly describe what is included in the AAR (4)

A
  • Opinion on whether policy liabilities determined by AA are fairly represented in insurer’s financial statement
  • detailed commentary
  • supporting data
  • calculations
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4
Q

identify the 3 audience for AAR

A
  • regulators
  • OSFI’s actuaries
  • insurer’s management
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5
Q

describe the key objective of “Application of Professional Standards to the AA’s Valuation”

A

ensure valuation of insurance contract liabilities adhere to standards set by CIA

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6
Q

describe the role of AA in applying professional standards

A
  • use judgement, develop methodologies, but remain consistent with professional standards
  • any methodology used should be denfensible
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7
Q

describe the relevant standards regarding the appointed actuary’s data

A

data must be accurate, relevant and consistent over time

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8
Q

what should be done if there are changes in data or methodology from previous year?

A

changes should be justified and clearly disclosed in the report

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9
Q

what are the deadlines for submitting AAR, FCT and Peer Review report?

A
  • AAR: 60 days post fiscal year end
  • FCT: earlier of 30 days post presentation to the board or one year after fiscal year end
  • Peer Review:
    • pre-release: same as P&C financial returns
    • post-release: 30 days after release of AA’s report (on work reviewed)
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10
Q

what minimum qualification must appointed actuary have?

A

FCIA

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11
Q

Can the AA’s valuation be different from amounts booked in the Annual Report?

A

Yes, but if the difference is greater than AA’s materiality standard, AA must provide an explanation

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12
Q

what actions can OSFI take if they find issues during an AAR review?

A
  • OSFI can require modifications to assumptions or methods and mandate a re-filing of AAR
  • they may also request supporting documentation or a report from an independent actuary
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13
Q

what is expected of AA during an OSFI review of AAR?

A
  • respond promptly to supplemental requests
  • have supporting documentation available for inspection
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14
Q

identify 3 sections that should be included in any AAR

A

any 3 of
- Expression of opinion
- Supplementary information supporting the opinion
- Materiality standard
- Data
- Risk adjustment for non-financial risk
- LIC
- LRC

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15
Q

Under the margin approach, what must the AA disclose about the margins?

A

the level of margin used for each actuarial line of business and its justification

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16
Q

what is the AA required to disclose about insurance acquisition cash flows?

A

the recoverability test as required by IFRS17

17
Q

quizzes

A
18
Q

if the actuary was appointed in the last year, what must AAR include about the AA?

A
  • date of appointment
  • previous actuary’s resignation date
  • when OFSI was informed about the appointment
  • confirmation of communication with former actuary as per ICA
  • a comprehensive list of the new actuary’s qualifications
19
Q

identify the annual reporting requirement in the AAR for BoD or Audit - Canadian entities

A

AAR must disclose the date the AA met with board or audit committee

20
Q

identify the annual reporting requirement in the AAR for BoD or Audit - foreign entities

A

AAR must disclose the date of AA met with the chief agent

21
Q

identify disclosures in the AAR regarding continuing education

A

AAR must disclose that the AA is in compliance with the continuing professional development requirements of the CIA

22
Q

identify disclosures in the AAR regarding compensation

A
  • disclose total compensation to ensure unbiased judgement
  • methodology for deriving compensation
  • compensation details for an internal actuary (salaries and bonuses)
  • compensation details for an external actuary (consulting fees)
  • disclose compensation details to OSFI in a separate cover letter
23
Q

identify disclosures in the AAR regarding reporting relationship for an internal actuary

A

老板, 变化（已经发生、将会发生）
- must disclose the name and position of their direct supervisors including both solid & dotted line reporting relationships
- should report any changes in reporting relationships that occurred within the past year
- need to disclose any expected changes in reporting relationships

24
Q

identify disclosures in the AAR regarding reporting relationships for an external actuary

A

谁雇用, 与谁联系并讨论
- should disclose names and positions of their main contacts within the entity
- must include name and position of the individual who hired them
- need to disclose the entity employees with whom they discuss their findings and rpeorts

25
Q

what disclosures are required by new AA in next AAR

A
  • dates: outgoing AA exit date, incoming AA start date, PSFO notification date
  • communication: between incoming and outgoing AA
  • qualification of new AA
26
Q

identify the purpose of Unpaid Claims and Loss Ratio Analysis exhibit

A

to allow the presentation of industry loss information in a standard format

27
Q

identify the type of analysis the UCLR Exhibit is designed to facilitate

A
  • impact of discounting on estimates of future CFs
  • loss trends
28
Q

briefly identify the information contained in UCLR

A

it is organized by AY and LOB, shows
- Paid loss
- LIC including FCFs
- AIC including FCFs
- Loss Ratio
- Claim Counts

29
Q

what is the formula for LR for 2022 and prior?

A

claims/EP

30
Q

what is the formula for LR for after 2022?

A

claims / insurance revenue

31
Q

AA’s expression of opinion

A

To the policyholder and shareholder of ABC insurance company,
I have valued the policy liabilities of the company for its consolidated financial statements prepared in accordance with IFRS for the year ended…
In my Opinion, the amount of policy liabilities is appropriate for this purpose. The valuation conforms to AAP in Canada and the consolidated financial statements fairly present the results of the valuation.

32
Q

AA’s expression of opinion fill in the blank information

A
  • name and signature of AA
  • date and location where opinion was signed

Exam 6 (58 decks)

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