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Flashcards in Trickzzz Deck (19):
1

RBC Action Levels

-Company Action
-Regulatory Action
-Authorized Control
-Mandatory Control

TONKA Toy

2

SAO

Identification
Scope
Opinion
Relevant Comments

3

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

4

IRIS Ratios

Overall
Profitability
Liquidity
Reserve

Only Profitable Loss Ratios

5

Reinsurance Agreement Terms

Timely payments to cedents
Reporting Quarterly
Insolvency Agreement
Profit (No guarantee)

Reinsure your trip

6

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

7

Exemptions from being labeled as fronting company

Captives
Affiliated Transactions
Pools
Small Amounts

8

Reasons for Gov't involvement in Insurance

Unmet by pvt mkt
Compulsory
Convenient
Efficient
Social Purposes

9

Notes to Financial Statements Requiring Actuarial Involvement

Discounting
Changes in Incurred Loss/LAE
Reinsurance
Asbestos/Envi
Premium Deficiency Reserves

10

Notes Potentially Relevant to Actuaries

Significant Accounting Policies
High Deductibles
Intercompany Pooling
Structured Settlements
Events Subsequent

11

Recommendations for Risk Margins

Methodology(consistent) over lifetime
Assumptions(consistent) to those made in calculation of liability
Product (vary by)
Sound (consistent with pricing)

12

SAO Relevant Comments

Reinsurance
Assumptions and Methods
Material Adverse Deviation
B (exhibit) significant parts
Longterm Contracts
Ratios (IRIS)

13

SAO: Significant items from part B

Sal and Sub
Pool (Net reserves)
Asbestos/Envi (Net reserves)
Discounting
Extended claims made (L/LAE)

14

5 Steps of a rating process

Background info
Meetings btw analyst and senior management
Proposal
Decision
Publish

15

Stock Valuation

Top 2 redeemable preferred=purchase price + acq costs
Top 2 perpetual= fair value
lower rated all = min(fv, bv)

16

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"

17

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

18

Motivation for commutation

Believe you are benefitting
Ending a relationship
Exiting a LOB
Solvency Concerns

19

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