Mneumonic Device Flashcards
ART
Important Differences between SAP and GAAP
Asset recognition: SAP - Asset is recognized when expense is incurred; GAAP - May defer recognition to achieve matching of revenue & expenses (as with DAC)
Reinsurance in loss reserves: SAP - loss reserves are recorded NET of reinsurance; GAAP - loss reserves are recorded GROSS of reinsurance
Taxes: SAP - taxes (mostly) not deferred; GAAP - tax can be deferred
Battleacts Odomirok 8/9
CARDP SHIES
Notes to Financial Statements Req Involvement by/Relevant To Actuaries
Required
Change in incurred Loss & LAE
Asbestos and Environmental Reserves
Reinsurance
Discounting of Unpaid Loss & LAE
Premium Deficiency Reserve
Relevant
Summary of Significant Accounting Principles
High Deductibles
Interpooling Companies
Events Subsequent (Type 1, new development on old claim, Type 2, completely new claim)
Structured Settlements
Battleacts Odomirok 10
COB
General Interogatories provide furthur information on the following…
The purpose of the interogatories is to provide information on:
Controls (both internal and external)
Operations
Business Practices
Battleacts Odomirok 11
R-MESS
Items discussed in General Interogatories
Regulatory Exams
Merger activity
Exemptions from regulations
Sales Commissions - whether they’re excessive just to acquire business
Suspension of licenses - if applicable
Battleacts Odomirok 11
JRRFC&S
What does regulator consider when eval. an unauth. reins. app. for cert.
Jurisdiction of reinsurer
Rating from a rating agency
Regulatory History
Financial Positioin
C&S Capital and Surplus
Odomirok 14
SEDR
Reasons for Commutation
Solvency - insurer/reinsurer concerned about other’s solvency
Exit - commutation provides a way for the reinsurer (& potentially, eventually, for the primary insurer) to exit a particular market
Disputes - disagreements between parties over contract provisions
Reserves - primary/reinsurer potentially disagree about value of reserves (both may think they are getting a good deal under the commutation
Klann
EDTU
Steps to price commutation
Estimate the claim payments that would be made in the absence of commutations (reins. recov for insurer, loss reserves for reinsurer)
Discount the estimates
Tax effects
Unique considerations
Klann
F-CAT-SWIPLES
Functions of Reinsurance
Fronting Arrangements
CATatastraphe protection
Surplus relief and capital efficiency
Withdrawal from market
Internal reinsurance transactions
Pools - mandatory and voluntary
Large Line Capacity
Enter market and/or UW guidance
Stabilie Results
Cedar
PRICE P
Pitfalls of risk transfer analysis
Profit commissions
Reinsurer expenses
Interest rates
Commutation timing
Evaluation date
Premiums
Freihaut
DT-RAPID
Development of reserves over time attributable to specific years and lines (2,3,4)
Trends in frequency and severity (1,2,5)
-
calculate RBC loss-sensitive discount (7)
evaluate Adequacy of recorded reserves (2,5)
determine Payment patterns for discounting (3)
I observe split between actual reserves (IBNR) and case reserves (4,5)
Disclosures for SAO (1)
Odomirok 15
