Trickzzz Flashcards
RBC Action Levels
- Company Action
- Regulatory Action
- Authorized Control
- Mandatory Control
TONKA Toy
SAO
Identification
Scope
Opinion
Relevant Comments
SAO Potential Opinions
No Opinion Excessive/Redundant Reasonable Deficient Qualified
When you ask an Actuary what their opinion on reserves is, you are asking a Nerd a Question
IRIS Ratios
Overall
Profitability
Liquidity
Reserve
Only Profitable Loss Ratios
Reinsurance Agreement Terms
Timely payments to cedents
Reporting Quarterly
Insolvency Agreement
Profit (No guarantee)
Reinsure your trip
Core Principles - U.S. Financial Solvency
Regulatory Reporting Off-Site Monitoring On-Site Financial Exam Reserve and Capital Adequacy Regulatory Control Preventative and Corrective Measures Exiting the Market/Receivership
Exemptions from being labeled as fronting company
Captives
Affiliated Transactions
Pools
Small Amounts
Reasons for Gov’t involvement in Insurance
Unmet by pvt mkt Compulsory Convenient Efficient Social Purposes
Notes to Financial Statements Requiring Actuarial Involvement
Discounting Changes in Incurred Loss/LAE Reinsurance Asbestos/Envi Premium Deficiency Reserves
Notes Potentially Relevant to Actuaries
Significant Accounting Policies High Deductibles Intercompany Pooling Structured Settlements Events Subsequent
Recommendations for Risk Margins
Methodology(consistent) over lifetime
Assumptions(consistent) to those made in calculation of liability
Product (vary by)
Sound (consistent with pricing)
SAO Relevant Comments
Reinsurance Assumptions and Methods Material Adverse Deviation B (exhibit) significant parts Longterm Contracts Ratios (IRIS)
SAO: Significant items from part B
Sal and Sub Pool (Net reserves) Asbestos/Envi (Net reserves) Discounting Extended claims made (L/LAE)
5 Steps of a rating process
Background info Meetings btw analyst and senior management Proposal Decision Publish
Stock Valuation
Top 2 redeemable preferred=purchase price + acq costs
Top 2 perpetual= fair value
lower rated all = min(fv, bv)
Surplus Adjustment
Prior Surplus \+ Net Income \+ Change in net unrealized capital gains LESS capital gains tax \+change in net unrealized foreign exchange capital gain \+change in net deferred income tax - change in nonadmitted assets -change in provision for reinsurance \+/- change in accounting principles \+ capital changes \+ surplus adjustments - dividends to STOCKHOLDERS \+ write-ins"
6 principal functions of reinsurance
- Increase large line capacity
- provide catastrophe protection
- stabilize loss experience
- provide surplus relief
- facilitate withdrawal from a market segment
- provide underwriting guidance
Motivation for commutation
Believe you are benefitting
Ending a relationship
Exiting a LOB
Solvency Concerns
SAO Disclosures (generic)
Accounting changes, Reserves being opined upon, intended Users, Title, Collectibility of reinsurance, Purpose, Basis of reserve presentation, Margins (risk margins), Significant events that could cause material adverse deviation, Discounting of reserves, Gross or net reserves, Other actuary’s analysis being relied upon, Reserve deficiency / redundancy, Qualified opinion
