CCIR. Instructions

Question 1

What is the fundamental accounting equation for equity?

Answer 1

Assets = Liabilities + Equity

Question 2

What is the 2nd method to calculate equity (from prior year)?

Answer 2

Eq(x) = Eq(x-1) + CI(x)
CI = Comprehensive Income = NI + OCI - Paid dividends (if any)

Question 3

What is the 3rd method to get equity (from balance sheet items)?

Answer 3

E(x) = PHE(x) + SHE(x) + nci(x)

PHE(x) = Policyholder’s equity for year x
SHE(x) = Shareholder’s equity for year x
nci(x) = non-controlling interests for year x

Question 4

Identify the 7 components of Shareholder’s equity? (Hint: CP-CORNA)

Answer 4

1. Common Shares
2. Preferred Shares
3. Contributed Surplus
4. Other Capital
5. Retained Earnings
6. Nuclear Reserves
7. AOCI

Question 5

Identify the 5 components of Policyholder’s equity.

Answer 5

1. Residual Interest (Non-Stock)
2. Participating Account
3. Participating Account - Accumulated OCI (Loss)
4. Non-Participating Account
5. Non-Participating Account - Accumulated OCI (Loss)

Question 6

Define unrealized gain.

Answer 6

An increase in the value of an asset or investment that an investor has not sold.

They are included in AOCI (line 570 from 20.11)

Question 7

How do you calculate the Net Combined Operating Ratio? (NCOR)

Answer 7

NLR + Operating Expenses / EP

Question 8

How do you calculate the Net Loss Ratio (NLR)?

Answer 8

APV(incurred claims) / EP
APV(inc claims) = paid loss in period + chg(APV of unpaid claims)
EP = WP - chg(UEP)

Question 9

Calculate Net Income (NI)

Answer 9

NI = ISR + NIR + OIE - Taxes + Discontinued Operations

ISR = Insurance Service Result
NIR = Net Investment Result
OIE = Other Income & Expenses

Question 10

Calculate Insurance Service Result (ISR)

Answer 10

ISR = TIR - ISE + NRE

TIR = Total Insurance Revenue
ISE = Insurance Service Expenses
NRE = Net Expenses from Reinsurance Contracts Held

Note: if ISE is already negative, then add it instead of subtracting

Question 11

Calculate Total Insurance Revenue (TIR)

Answer 11

TIR = sum of:
Revenues from PAA Contracts
Revenues from GMM Contracts
Revenues from VFA Contracts

Question 12

Calculate Net Investment Income (NII)

(Hint: TT-DI-ET)

Answer 12

NII =
+ Total Realized Gains (Losses) on Sale
+ Total Fair Value Gains (Losses)
+ Dividends
+ Gross Investment Income
- Investment Expenses
- Investment Taxes

Question 13

Calculate Investment Return (IR)

Answer 13

IR = NII - Provision for Credit Losses

Question 14

Calculate Total Realized Gains (Losses) on Sale or Total Fair Value Gains (Losses)

(Hint: BIMPI)

Answer 14

Sum of:
Bonds
Mortgage Loans
Preferred & Common Shares
Investment Properties
Income from Derivative Assets

Note: they have to tell whether items pertained to the realized gains or the fair value gains.

Question 15

Calculate Adjusted Equity

Answer 15

Adjusted Equity = E(x) - NCI - Cat Reserves - Unregistered Reins

E = Total Equity from page 20.11
NCI = Non-controlling interests
Cat Reserves : Cat Reserves marging
Unregistered Reins marging

Question 16

Calculate Investment Yield

Answer 16

Investment Yield= 2(NIR + PI)100 / (Vb + Ve - NIR - PI)

NIR = Investment Return
PI = Share of Net Income (Loss) of Equity Accounted Investees
Vb & Ve : total assets including cash , x and x-1

Question 17

Calculate Return on Equity

CCIR.intr

Answer 17

ROE = (2 * NI * 100) / (Eb + Ee)

NI = Net Income
Eb = E(x-1)
Ee = E(x)

Question 18

Calculate Agents and Brokers Balances Due from Subs and Associates as a % of Adjusted Equity

Answer 18

(Receivables-unaffiliated agents and brokers + Receivables-subsidiaries, associates and joint ventures) / Adjusted Equity

Question 19

Claims Development as a % of Adjusted Equity

Answer 19

Amount excess (deficiency) / Adjusted Equity

Question 20

Calculate the Amount of Excess (Deficiency)

Answer 20

Excess/Deficency = estimate of ult CY_X-1 – estimate ult CY_X

Excess/Deficency = unpaid CY_X-1 – unpaid CY_X – paid CY_X

STATE EXPLICITLY IF EXCESS/DEFICIENCY/NEITHER !!! neg = Deficency