RESERVING FOR LOSS SENSITIVE PREMIUM ITEMS. By Brian Z. Brown and Michael C. Schmitz. Abstract

Size: px
Start display at page:

Download "RESERVING FOR LOSS SENSITIVE PREMIUM ITEMS. By Brian Z. Brown and Michael C. Schmitz. Abstract"

Transcription

1 RESERVING FOR LOSS SENSITIVE PREMIUM ITEMS By Brian Z. Brown and Michael C. Schmitz Abstract Many insurers and reinsurers have significant accruals for loss sensitive premium items. Examples of contract features which may require an accrual are: 1. Retrospective rated policies and dividend policies for primary insurers; and 2. Contingent profit commission and no claim bonuses for reinsurers. In estimating these accruals it is important to reflect the range of potential outcomes as illustrated by probability distributions as expected values will usually create biased results. This paper discusses a general framework for establishing these accruals and then describe the process for two hypothetical policies. H:\BRIAN\PAPERS\APR.99\abstract.doc

2 RESERVING FOR LOSS SENSITIVE PREMIUM ITEMS By Brian Z. Brown and Michael C. Schmitz Many insurers and reinsurers have significant accruals for loss sensitive premium items. Examples of contract features which may require an accrual are: 1. Retrospectively rated policies and dividend policies for primary insurers; and 2. Contingent profit commission and no claim bonus plans for reinsurers. In estimating these accruals it is important to reflect the range of potential outcomes as illustrated by probability distributions since expected values will usually create biased results. This paper discusses a general framework for establishing these accruals and then describes the process for two hypothetical policies. The general approach involves estimating a profit sharing/loss sensitive provision at policy inception and revising the provision over the life of the policy based on:. Actual loss experience; and. An estimated reporting pattern. PRIMARY INSURER RETROSPECTIVE PREMIUM ACCRUALS For a primary insurer, we will discuss the process of establishing a reserve for a retrospectively rated policy. Background A basic form of a retrospectively rated policy premium is: H < R = T(B+CL) < G where H is the minimum premium; R is the retrospectively rated premium; T is the tax multiplier; B is the basic premium; C is the loss conversion factor; L is the actual losses (reported or paid) during the policy period; and G is the maximum premium. See Retrospective Rating: Excess Factors by William R. Gillian, PCAS, LXXVIII, Part 1

3 - 2 - To make the example easier to follow we will assume that: H = 300 T = 1.00 B = 300 C = 1.1 losses = 700 G = 1,100 One may ask if the expected premium is equal to: R = 1(300+(1.1)(700)) = 1,070. The answer may be no because of the limiting effect of the minimum and maximum premium. For our example, we will assume that the loss distribution is as follows: LOSS DISTRIBUTION AT INCEPTION Probability Outcome 0.10 $ ,000 In practice, the actual loss distribution will not be discrete, but rather continuous. However, the above simple distribution will illustrate the concept. As Exhibit 1 displays, if the insured generates losses of 800, 900 or 1,000, then the retrospective premium is limited at the maximum premium of 1,100. Reflecting the maximum, the expected retrospective premium is 1,013, which is below the premium of 1,070 calculated based on expected losses alone. If the retrospective reserve is calculated as the ultimate retrospective premium less premium paid to date and the premium paid-to-date is 500, then the retrospective reserve is However, if the expected values were used in the calculation instead of reflecting the probability distribution, 2 It may be appropriate to reflect the possibility that the insured it not able to pay the premium in the calculations (e.g., non payment risk due to bankruptcy). See Brian Z. Brown, Pricing for Credit Exposure, PCAS LXXIX, 1992, page 186 for more details on a process to estimate the non-payment reserve.

4 - 3 - then the expected premium of 1,070 would be used to calculate an incorrect reserve of 570 (an overstatement of 11.1%). Premium Calculations Post Policy Inception A complicating factor regarding retrospective reserves is that the distribution outlined above and in much of actuarial literature relates to loss outcomes at the beginning of the policy period. The formulation of the loss distribution becomes more problematic after claims are a number of years old. The above concept may be illustrated by a simple example. We will use the retrospective parameters outlined above but assume that it is currently three years after policy inception. If actual incurred losses are 560 and we expect these actual losses to ultimately develop by 25% to 700, then one may ask if the ultimate premium is equal to: and the reserve equal to: R = 1(300+(1.1))(560x1.25) = 1,070 1,070 less the indicated premium with losses at 560 (i.e., 154 = 1, ). The answer again may be no since it depends upon the distribution of the development of losses. Let us assume the 560 of incurred losses will develop to an expected value of 700 based on the following distribution of ultimate losses: LOSS DISTRIBUTION 3 YEARS POST-INCEPTION Probability es Exhibit 2 displays the premium calculations based on the loss probabilities in the above table. The expected value ultimate premium reflecting the maximum premium is 1, This generates a reserve of which is 12% below the reserve of 154 calculated above based on the expected value of losses.

5 - 4 - Additional Complications/Adjustments Another difficulty with a standard projection method based on expected values is that one average loss development factor (LDF) is frequently applied to every account. While this process develops theoretically correct losses in total it will not develop losses correctly for each account. Due to differences in development patterns by account and even for an account over time, a group of losses will have their own unique pattern of development. For example, we would expect the following two claim populations for workers compensation to display different development patterns. Claim Population Number of Open Claims Paid es Case Reserves Incurred es A 25 1, ,000 B 50 1, ,000 Even if the claim populations came from the same state/classification and are at the same stage of maturity, population B will probably develop differently than population A because it has twice as many open claims with three times as much case reserves as population A. Therefore, we would normally expect that population B s claims will have more potential for unusual development and have a larger variance than population A s claims (additionally B s losses often will develop to a higher ultimate than A s due to supplemental case development). In some of our analyses, we have found that it may be more accurate (especially for accounts with limited credibility) to estimate development by account into two pieces: 1. Supplemental case development; and 2. True IBNR. This method appears to work well for coverages where true IBNR is not the major component of development. An example of a coverage with this characteristic is workers compensation. Also, recall that for workers compensation, another element of IBNR is the reserve for reopened claims. For workers compensation we could estimate supplemental development as a factor times case reserves (or a combination of limited case reserves and open claim counts). 3 3 Methods to estimate case reserve development factors can be found in Pricing for Retained Workers Compensation Exposures by Brian Z. Brown and Michael D. Price, PCAS, LXXXIV, page 128.

6 - 5 - True IBNR can then be estimated based on the following: Premium; Reported losses; Reported claims; Closed claims; and Other factors. The above factors can then be varied to determine the sensitivity of the premium reserve to changes in loss outcomes. If a small or moderate change in the assumptions results in a significant change in the premium reserve accrual, then more detailed analysis may be performed (e.g., independent review of case reserve adequacy). Alternatively, the actuary may wish to establish a lower premium reserve to reflect a margin for the uncertainty associated with estimating loss reserves by account. Another element to consider when establishing reserves for a retrospectively rated policy is the probability of default. Some insureds may file for bankruptcy and be unable to make future premium payments. One way to estimate this reserve is to apply default probabilities to the projected payments by year. This method is outlined in a previous PCAS Proceedings Paper. 4 REINSURANCE PROFIT SHARING AGREEMENTS Similar issues arise in calculating accruals for profit sharing agreements on reinsurance contracts. Background An example of one form of a reinsurance profit sharing agreement is illustrated by the following terms: Layer: $500,000 excess of $500,000 Premium: 15% of Subject Net Earned Premium (SNEP) Reinsurer Expense Factor: 40% of Reinsurance Premium (Including Margin) Profit Sharing = ½ x (Reinsurance premium losses Reinsurers expenses) Timing of Disbursements: at 42 months and annually thereafter. 4 ibid 2.

7 - 6 - Therefore, if no losses are ceded and SNEP is 10,000,000 then the profit sharing payment to the ceding company is: 0.5 x [1,500,000 0 (0.40)(1,500,000] = $450,000 The question is how should the profit sharing contract be booked on the reinsurer s and ceding company s financial statement. Inception Calculations This issue may be easiest to solve at contract inception since the cedant and reinsurer may have gone through detailed loss simulations to determine the expected losses ceded to the contract and the likely variation in the loss outcomes. For illustrative purposes, we assume that both the cedant and reinsurer have estimated the following distribution of loss outcomes in the $500,000 excess of $500,000 layer. Ceded Distribution/Profit Sharing Calculation Probability Ceded Outcome Profit Sharing Return 1 10% $0 $450, , , ,000, ,500, ,000, ,500,000 0 Value $1,250,000 $85,000 1) Profit sharing return amounts are calculated for various loss outcomes based on the formula above. The expected value profit sharing amount is calculated as the weighted average return using the given probabilities (i.e., it is not calculated from the formula using the expected value losses). We will further assume the reinsurer writes 100 such contracts for insureds with similar loss distributions. It would be incorrect to use the expected value loss outcome of $1,250,000 in computing the profit sharing contributions for each insured, as some insureds will have worse experience and some will have better experience. As the above table and Exhibit 3 illustrate, an expected value profit sharing return of $85,000 is generated based on the above loss distribution with an expected value of $1,250,000. While an actual loss outcome of $1,250,000 implies a zero profit sharing amount, the distribution of loss outcomes comprising an expected loss amount of $1,250,000 implies a positive expected profit sharing amount.

8 - 7 - At contract inception, the reinsurer should establish a loss reserve of $1,250,000 and a profit sharing reserve of $85,000 for each of the 100 contracts (assuming for illustrative purposes that all premium is earned immediately at inception). While the two reserves at first glance appear inconsistent, they are not. Calculations Post Policy Inception One difficulty that arises is determining how to change the reserve over time as experience emerges. As time progresses, some insureds will move towards a $0 or $500,000 loss outcome with profit sharing payments while other insureds will move towards high loss outcomes and no profit sharing returns. The difficulty lies in projecting accurate loss outcomes for each insured. For example, if a Bornhuetter-Ferguson (B-F) method is used to project losses by account for 100 accounts, then chances are that the analyst will project ultimate losses near $1,250,000 per contract early on (due to the fact that the reporting pattern for casualty excess of loss contracts is extended). If the analyst then uses this loss outcome to estimate a profit sharing return accrual, then a return of $0 is likely to be indicated early on. However, a profit sharing return of $85,000 may still be appropriate for the same reason it was initially. To overcome this flaw it may be prudent to estimate the expected (based on all possible loss outcomes) profit sharing return at policy inception and gradually change the expected return over time as individual account s actual experience becomes mature (and thereby reflecting a full spectrum of outcomes). Additionally, making the calculation at policy inception allows the actuary to determine the significance of the profit sharing return relative to loss reserves. In our example, the expected profit sharing reserve of $85,000 is 6.8% of the initial loss projection of $1,250,000. Some actuaries may therefore believe that total reserves (both loss and profit sharing) are appropriate if a 7% cushion exists in loss reserves with no profit sharing reserve. This assumption may be reasonable at initial evaluations but will likely be flawed as the contracts mature. On an individual account basis, maturing contracts with relatively high losses and loss reserves should be associated with lower reserves for profit sharing and vice versa. Clearly, this runs counter to tying the profit sharing reserves to a fixed percentage of the loss reserve. One method to determine a profit sharing reserve involves establishing a profit sharing reporting patterns by applying a consistent methodology to estimate ultimate losses at regular evaluation points. These ultimate losses can then be used to estimate the profit sharing return at each point. To illustrate this concept, we will use the previous example and assume a B-F method is used to estimate losses by account and losses follow the reporting pattern displayed below:

9 - 8 - Evaluation Period (years after inception) Percentage of es Reported 1 10% If we write 100 identical accounts with the parameters displayed above, our initial B-F loss selection is $1,250,000 and our B-F calculation at the end of year 1 is: (1) (2) Actual Outcome (3) es (4) (5) IBNR (6) Actual Reported (7) Estimate Reporting Probability Pattern 10% $0 $1,250 10% $1,125 $0 $1, , , , ,000 1, , , ,500 1, , , ,000 1, , , ,500 1, , ,375 Average $1,250 (5) = (3) x [1-(4)] (6) = (2) x (4) At the first evaluation, all of the loss projections exceed $900,000 {i.e., $1,500,000 x (1-40%)} so the indicated profit sharing return is $0. However, some accounts will generate a profit, sharing return based on the actual loss outcomes in column (2). $85,000 is the expected profit sharing return. Exhibits 4 through 8 display subsequent B-F calculations. We note that the B-F method produces an unbiased estimate of ultimate losses of $1,250,000. Based on the above mentioned B-F calculations, reflecting the probability distribution of losses, the estimate of ultimate losses is equal to the expected value of $1,250,000 for every calculation.

10 However, the profit sharing return is understated at early evaluations due to the fact that the B-F calculations produce loss estimates near the mean (and thus do not reflect the true variation in losses e.g., with some loss outcomes at low amounts). Thus the indicated profit sharing return is underestimated using this method. The following table displays the indicated profit sharing return by year based on our B-F calculations for losses: 4 43, , ,000 However, as discussed previously, if the reinsurer wrote 100 accounts we would expect that 30% of the accounts would ultimately generate losses low enough for a profit sharing payment. Therefore, a profit sharing return of $8.5 million is expected to be paid (i.e., $85,000 x 100). Performing a B-F calculation on each account to determine ultimate losses and then using the B- F indicated losses in the profit sharing formula produces unbiased estimates of losses but understates the profit sharing calculation at early evaluations. An alternate method is to use an a priori estimate of the profit sharing accrual and age this a priori estimate over time (based on a reporting pattern) to establish a bulk profit sharing accrual. For example if we use the profit sharing reporting pattern above, we have the following: (2) = Based on B-F Method by Account (3) = (2) + 85,000 (5) =(4)x(1-3) (6) = (5) + (2)

11 The individual contract profit sharing return is added to the bulk provision to estimate the ultimate profit sharing return (see Column (6)). Profit sharing payments to date can be subtracted to estimate the accrual for future profit sharing payments. CONCLUSION This paper has attempted to illustrate the importance of reflecting the probability distributions in estimating various non-loss reserve accruals. If the probability distribution is not reflected the non-loss reserve accruals are likely to be mis-stated. We have also outlined an approach to estimate profit sharing returns. The approach involves estimating a loss sensitive provision at policy inception and revising the provisions over the life of the policy based on actual loss experience, projected ultimate losses, and an estimated profit sharing reporting pattern.

12 Exhibit 1 (1) RETROSPECTIVE PREMIUM ESTIMATE AT INCEPTION (2) (3) (4) Retro Premium (1)x(3) Retro Probability es Premium , , * , *.10 1,000 1, * Premium 1,013 * Limited to maximum premium

13 Exhibit 2 (1) RETROSPECTIVE PREMIUM ESTIMATE POST-INCEPTION (2) (3) (4) Premium (1)x(3) Probability es Premium , , ,100* ,100* Premium 1,051.5 * Limited to maximum premium

14 Exhibit 3 If the insured writes 100 risks which are identical, the following reserves are needed: Number of Policies A Outcome Per Policy Profit Sharing Return Per Policy , , , ,500 0 Total All Policies 125,000 8,500 Average B 1, A B Based on probabilities from page 6 Total divided by 100 policies Therefore, for these 100 risks, a reserve of $125,000,000 is needed for losses and $8,500,000 for profit sharing returns or an average $1,250,000 loss reserve and $85,000 profit sharing reserve per contract.

15 Exhibit 4 (1) (2) Outcome (3) es AT THE END OF YEAR 2 (4) (5) IBNR (6) Actual Reported (7) Estimate (8)* Estimated Profit Share Probability Reporting Pattern 10% $0 $1,250 30% $875 $0 $ , , ,000 1, , ,500 1, , ,000 1, , ,500 1, ,625 0 Average $1, * (5) = (3)[1-(4)] (6) = 30% of (2) (8) = Max {(.5) x [1,500-(7)-600], 0} At this evaluation the account with $0 in ultimate losses generates a profit sharing amount and the expected amount based on the above methodology is 1,250 compared to the correct amount of $85,000. Again the ultimate loss estimate is unbiased.

16 Exhibit 5 (1) (2) Outcome (3) es AT THE END OF YEAR 3 (4) (5) IBNR (6) Actual Reported (7) Estimate (8)* Estimated Profit Share Probabilit y Reporting Pattern 10% $0 $1,250 50% $625 $0 $ , ,000 1, , ,500 1, , ,000 1, ,000 1, ,500 1, ,250 1,875 0 Average $1, (5) = (3)[1-(4)] (6) = 50% of (2) (8) = Max {(.5) x [1,500-(7)-600], 0} Profit sharing amount based on the above methodology is $16,250 compared to correct amount of $85,000.

17 Exhibit 6 (1) (2) Outcome (3) es AT THE END OF YEAR 4 (4) (5) IBNR (6) Actual Reported (7) Estimate (8)* Estimated Profit Share Probability Reporting Pattern 10% $0 $1,250 70% $375 $0 $ , ,000 1, , ,500 1, ,050 1, ,000 1, ,400 1, ,500 1, ,750 2,125 0 Average $1, (5) = (3)[1-(4)] (6) = 70% of (2) (8) = Max {(.5) x [1,500-(7)-600], 0} Profit sharing amount based on the above methodology is $43,750 compared to correct amount of $85,000.

18 Exhibit 7 (1) (2) Outcome (3) es AT THE END OF YEAR 5 (4) (5) IBNR (6) Actual Reported (7) Estimate (8)* Estimated Profit Share Probability Reporting Pattern 10% 0 1,250 90% $ , ,000 1, , ,500 1, ,350 1, ,000 1, ,800 1, ,500 1, ,250 2,375 0 Average $1, (5) = (3)[1-(4)] (6) = 90% of (2) (8) = Max {(.5) x [1,500-(7)-600], 0} Profit sharing amount based on the above methodology is $71,250 compared to correct amount of $85,000.

19 Exhibit 8 (1) (2) Outcome (3) es AT THE END OF YEAR 6 (4) (5) IBNR (6) Actual Reported (7) Estimate (8)* Estimated Profit Share Probability Reporting Pattern 10% $0 $1, % $0 $0 $ , ,000 1, ,000 1, ,500 1, ,500 1, ,000 1, ,000 2, ,500 1, ,500 2,500 0 Average $1, (5) = (3)[1-(4)] (6) = 100% of (2) (8) = Max {(.5) x [1,500-(7)-600], 0} Profit sharing amount based on the above methodology is $85,000.

ACTUARIAL CONSIDERATIONS IN THE DEVELOPMENT OF AGENT CONTINGENT COMPENSATION PROGRAMS

ACTUARIAL CONSIDERATIONS IN THE DEVELOPMENT OF AGENT CONTINGENT COMPENSATION PROGRAMS ACTUARIAL CONSIDERATIONS IN THE DEVELOPMENT OF AGENT CONTINGENT COMPENSATION PROGRAMS Contingent compensation plans are developed by insurers as a tool to provide incentives to agents to obtain certain

More information

2014 Statutory Combined Annual Statement Schedule P Disclosure

2014 Statutory Combined Annual Statement Schedule P Disclosure 2014 Statutory Combined Annual Statement Schedule P Disclosure This disclosure provides supplemental facts and methodologies intended to enhance understanding of Schedule P reserve data. It provides additional

More information

Session 25 L, Introduction to General Insurance Ratemaking & Reserving: An Integrated Look. Moderator: W. Scott Lennox, FSA, FCAS, FCIA

Session 25 L, Introduction to General Insurance Ratemaking & Reserving: An Integrated Look. Moderator: W. Scott Lennox, FSA, FCAS, FCIA Session 25 L, Introduction to General Insurance Ratemaking & Reserving: An Integrated Look Moderator: W. Scott Lennox, FSA, FCAS, FCIA Presenter: Houston Cheng, FCAS, FCIA Society of Actuaries 2013 Annual

More information

IASB Educational Session Non-Life Claims Liability

IASB Educational Session Non-Life Claims Liability IASB Board Meeting Observer Note- Agenda Paper 10 January 2005 IASB Educational Session Non-Life Claims Liability Presented by the International Actuarial Association January 19, 2005 Sam Gutterman and

More information

Using Best Practices to Determine a Best Reserve Estimate

Using Best Practices to Determine a Best Reserve Estimate Using Best Practices to Determine a Best Reserve Estimate Paul J. Struzzieri, FCAS Paul R. Hussian, FCAS Milliman & Robertson, Inc. Two Pennsylvania Plaza Suite 1552 New York, NY 10121 (212) 279-7166 Using

More information

ABC Auto Insurance Company Actuarial Review of Loss and LAE Reserves As of 12/31/11

ABC Auto Insurance Company Actuarial Review of Loss and LAE Reserves As of 12/31/11 ABC Auto Insurance Company Actuarial Review of Loss and LAE Reserves As of 12/31/11 Prepared by: Joe Actuary, ACAS, MAAA What s the Point Actuarial Consultants, Inc. Background and Scope ABC Auto Ins Co

More information

Commissioner Donna Lee H. Williams 841 Silver Lake Boulevard * Dover, DE 19904 * (302) 739-4251 (Hours: Mon-Fri 8-4:30 EST) www.state.de.

Commissioner Donna Lee H. Williams 841 Silver Lake Boulevard * Dover, DE 19904 * (302) 739-4251 (Hours: Mon-Fri 8-4:30 EST) www.state.de. Commissioner Donna Lee H. Williams 841 Silver Lake Boulevard * Dover, DE 19904 * (302) 739-4251 (Hours: Mon-Fri 8-4:30 EST) www.state.de.us/inscom FORMS AND RATES BULLETIN 14 INCORPORATED Submission Date:

More information

Benefits of Owning a Captive Insurance Company

Benefits of Owning a Captive Insurance Company Benefits of Owning a Captive Insurance Company A Game Changing Tool for Business Owners Sean G. King, JD, CPA, MAcc Principal, CIC Services, LLC www.cicservicesllc.com Captive Insurance Companies are a

More information

GLOSSARY OF ACTUARIAL AND RATEMAKING TERMINOLOGY

GLOSSARY OF ACTUARIAL AND RATEMAKING TERMINOLOGY GLOSSARY OF ACTUARIAL AND RATEMAKING TERMINOLOGY Term Accident Accident Date Accident Period Accident Year Case- Incurred Losses Accident Year Experience Acquisition Cost Actuary Adverse Selection (Anti-Selection,

More information

Basic Reinsurance Accounting Selected Topics

Basic Reinsurance Accounting Selected Topics Basic Reinsurance Accounting Selected Topics By Ralph S. Blanchard, III, FCAS, MAAA and Jim Klann, FCAS, MAAA CAS Study Note The purpose of this study note is to educate actuaries on certain basic reinsurance

More information

Chapter 47 - GROUP SELF-INSURANCE RULE IMIPLEMENTING THE INTERGOVERNMENTAL RISK MANAGEMENT ACT

Chapter 47 - GROUP SELF-INSURANCE RULE IMIPLEMENTING THE INTERGOVERNMENTAL RISK MANAGEMENT ACT Title 210 - NEBRASKA DEPARTMENT OF INSURANCE Chapter 47 - GROUP SELF-INSURANCE RULE IMIPLEMENTING THE INTERGOVERNMENTAL RISK MANAGEMENT ACT 001. Authority. This rule is promulgated pursuant to the authority

More information

Basics of Reinsurance Pricing

Basics of Reinsurance Pricing Basics of Reinsurance Pricing Actuarial Study Note David R. Clark, FCAS First Version 1996 Revised 2014 Copyright, David R. Clark, 2014 Basics of Reinsurance Pricing Introduction Like primary insurance,

More information

Guideline. Source of Earnings Disclosure (Life Insurance Companies) No: D-9 Date: December 2004 Revised: July 2010

Guideline. Source of Earnings Disclosure (Life Insurance Companies) No: D-9 Date: December 2004 Revised: July 2010 Guideline Subject: Category: (Life Insurance Companies) Accounting No: D-9 Date: December 2004 Revised: July 2010 This Guideline, which applies to life insurance companies and life insurance holding companies

More information

Educational Note. Premium Liabilities. Committee on Property and Casualty Insurance Financial Reporting. November 2014.

Educational Note. Premium Liabilities. Committee on Property and Casualty Insurance Financial Reporting. November 2014. Educational Note Premium Liabilities Committee on Property and Casualty Insurance Financial Reporting November 2014 Document 214114 Ce document est disponible en français 2014 Canadian Institute of Actuaries

More information

This Regulation shall be known and may be cited as the Affordable Care Act Medical Loss Ratio Rebate Regulation.

This Regulation shall be known and may be cited as the Affordable Care Act Medical Loss Ratio Rebate Regulation. Draft: 9/29/10 The NAIC solicits comments on this draft. Comments should be sent to Eric King, NAIC, at EKing@naic.org and John Engelhardt, NAIC, at JEngelha@naic.org by October 4, 2010. REGULATION FOR

More information

Stochastic Analysis of Long-Term Multiple-Decrement Contracts

Stochastic Analysis of Long-Term Multiple-Decrement Contracts Stochastic Analysis of Long-Term Multiple-Decrement Contracts Matthew Clark, FSA, MAAA, and Chad Runchey, FSA, MAAA Ernst & Young LLP Published in the July 2008 issue of the Actuarial Practice Forum Copyright

More information

Reserving for Extended Reporting Endorsement Coverage, Including the Death, Disability, and Retirement Policy Provision

Reserving for Extended Reporting Endorsement Coverage, Including the Death, Disability, and Retirement Policy Provision Including the Death, Disability, and Retirement Policy Provision Susan J. Forray, FCAS, MAAA Abstract. Writers of physicians professional liability (PPL) claims-made coverage typically offer a death, disability

More information

Pricing Alternative forms of Commercial Insurance cover

Pricing Alternative forms of Commercial Insurance cover Pricing Alternative forms of Commercial Insurance cover Prepared by Andrew Harford Presented to the Institute of Actuaries of Australia Biennial Convention 23-26 September 2007 Christchurch, New Zealand

More information

Insurance (Valuation of Long Term Liabilities) Regulations 2007 Consultative Document

Insurance (Valuation of Long Term Liabilities) Regulations 2007 Consultative Document Insurance (Valuation of Long Term Liabilities) Regulations 2007 Consultative Document 1. Introduction The Insurance and Pensions Authority has released a consultative draft of the Insurance (Valuation

More information

Guidance Note on Actuarial Review of Insurance Liabilities in respect of Employees Compensation and Motor Insurance Businesses

Guidance Note on Actuarial Review of Insurance Liabilities in respect of Employees Compensation and Motor Insurance Businesses Guidance Note on Actuarial Review of Insurance Liabilities in respect of Employees Compensation and Motor Insurance Businesses GN9 Introduction Under the Insurance Companies Ordinance (Cap. 41) ( Ordinance

More information

Basic Insurance Accounting Selected Topics

Basic Insurance Accounting Selected Topics By Ralph S. Blanchard III, FCAS, MAAA 1 July 2008 CAS Study Note Author s Change to This Edition This edition of the study note is the same as the June 2007 edition except for the following change to the

More information

MINNESOTA AGGREGATE FINANCIAL DATA REPORTING GUIDEBOOK. Annual Calls for Experience Valued as of December 31, 2015

MINNESOTA AGGREGATE FINANCIAL DATA REPORTING GUIDEBOOK. Annual Calls for Experience Valued as of December 31, 2015 MINNESOTA AGGREGATE FINANCIAL DATA REPORTING GUIDEBOOK Annual Calls for Experience Valued as of December 31, 2015 11/5/2015 ANNUAL CALLS FOR EXPERIENCE As the licensed Data Service Organization in Minnesota,

More information

Comment on the Exposure Draft Insurance Contracts

Comment on the Exposure Draft Insurance Contracts 30 November 2010 International Accounting Standards Board 30 Cannon Street London EC4M 6XH United Kingdom Dear Sir or Madame, Comment on the Exposure Draft Insurance Contracts We appreciate the longstanding

More information

Article from: Reinsurance News. August 2004 Issue No. 54

Article from: Reinsurance News. August 2004 Issue No. 54 Article from: Reinsurance News August 2004 Issue No. 54 REINSURANCE S SLETTER OF THE REINSURANCE SECTION AUGUST 2004 ISSUE NO. 54 XXX IMPLICATIONS by Juliette M. Burden, Gary R. Kelly, Bradley M. Smith

More information

FINANCIAL REVIEW. 18 Selected Financial Data 20 Management s Discussion and Analysis of Financial Condition and Results of Operations

FINANCIAL REVIEW. 18 Selected Financial Data 20 Management s Discussion and Analysis of Financial Condition and Results of Operations 2012 FINANCIAL REVIEW 18 Selected Financial Data 20 Management s Discussion and Analysis of Financial Condition and Results of Operations 82 Quantitative and Qualitative Disclosures About Market Risk 88

More information

GIIRR Model Solutions Fall 2014

GIIRR Model Solutions Fall 2014 GIIRR Model Solutions Fall 2014 1. Learning Objectives: 1. The candidate will understand the key considerations for general insurance actuarial analysis. Learning Outcomes: (1l) Adjust historical earned

More information

Outstanding Claims Liability Insurance Risk Charge Australia by class of. business (Level 2 Insurance Group)

Outstanding Claims Liability Insurance Risk Charge Australia by class of. business (Level 2 Insurance Group) Reporting Form GRF 210.0A_G Outstanding Claims Liability Insurance Risk Charge Australia by class of business (Level 2 Insurance Group) Instruction Guide Introduction This instruction guide is designed

More information

Basic Track I. 2011 CLRS September 15-16, 2011 Las Vegas, Nevada

Basic Track I. 2011 CLRS September 15-16, 2011 Las Vegas, Nevada Basic Track I 2011 CLRS September 15-16, 2011 Las Vegas, Nevada Introduction to Loss 2 Reserving CAS Statement of Principles Definitions Principles Considerations Basic Reserving Techniques Paid Loss Development

More information

PRINCIPLES AND PRACTICES OF FINANCIAL MANAGEMENT.

PRINCIPLES AND PRACTICES OF FINANCIAL MANAGEMENT. PPFM JULY 2013 PRINCIPLES AND PRACTICES OF FINANCIAL MANAGEMENT 1 PRINCIPLES AND PRACTICES OF FINANCIAL MANAGEMENT. This is an important document, which you should read and keep. 2 PRINCIPLES AND PRACTICES

More information

GUIDANCE NOTE 253 - DETERMINATION OF LIFE INSURANCE POLICY LIABILITIES

GUIDANCE NOTE 253 - DETERMINATION OF LIFE INSURANCE POLICY LIABILITIES THE INSTITUTE OF ACTUARIES OF AUSTRALIA A.C.N. 000 423 656 GUIDANCE NOTE 253 - DETERMINATION OF LIFE INSURANCE POLICY LIABILITIES APPLICATION Appointed Actuaries of Life Insurance Companies. LEGISLATION

More information

Umbrella & Excess Liability - Understanding & Quantifying Price Movement

Umbrella & Excess Liability - Understanding & Quantifying Price Movement Umbrella & Excess Liability - Understanding & Quantifying Price Movement Survey of Common Umbrella Price Monitoring Methods Jason Kundrot CARe Seminar on Reinsurance, 1 Survey of Common Umbrella Price

More information

IASB/FASB Meeting Week beginning 16 May 2011. 1. This paper discusses the accounting for reinsurance and asks the boards to decide whether to:

IASB/FASB Meeting Week beginning 16 May 2011. 1. This paper discusses the accounting for reinsurance and asks the boards to decide whether to: IASB/FASB Meeting Week beginning 16 May 2011 IASB Agenda reference 3J FASB Agenda Staff Paper reference 68J Contact(s) Jennifer Weiner jmweiner@fasb.org +1 (203) 956-5305 Adam Lindemuth alindemuth@fasb.org

More information

ARTICLE 20:06 INSURANCE. Chapter. 20:06:01 Administration. 20:06:02 Individual risk premium, Repealed. 20:06:03 Domestic stock insurers.

ARTICLE 20:06 INSURANCE. Chapter. 20:06:01 Administration. 20:06:02 Individual risk premium, Repealed. 20:06:03 Domestic stock insurers. ARTICLE 20:06 INSURANCE Chapter 20:06:01 Administration. 20:06:02 Individual risk premium, Repealed. 20:06:03 Domestic stock insurers. 20:06:04 Insider trading of equity securities. 20:06:05 Voting proxies

More information

Medicare Part D. MMA establishes a standard Part D drug benefit, which consists of four components or phases.

Medicare Part D. MMA establishes a standard Part D drug benefit, which consists of four components or phases. Medicare Part D The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) added voluntary prescription drug coverage to Medicare, the federal health insurance program for seniors

More information

Reflecting Reinsurance Costs in Rate Indications for Homeowners Insurance by Mark J. Homan, FCAS

Reflecting Reinsurance Costs in Rate Indications for Homeowners Insurance by Mark J. Homan, FCAS Reflecting Reinsurance Costs in Rate Indications for Homeowners Insurance by Mark J. Homan, FCAS 223 Reflecting Reinsurance Costs in Rate Indications for Homeowners Insurance by Mark J. Homan Biograuhv

More information

THE EMPIRE LIFE INSURANCE COMPANY

THE EMPIRE LIFE INSURANCE COMPANY THE EMPIRE LIFE INSURANCE COMPANY Condensed Interim Consolidated Financial Statements For the nine months ended September 30, 2013 Unaudited Issue Date: November 6, 2013 These condensed interim consolidated

More information

Basics of Reinsurance Pricing David R. Clark, FCAS

Basics of Reinsurance Pricing David R. Clark, FCAS Basics of Reinsurance Pricing David R. Clark, FCAS BasicsofR eiammance Pricing Introduclion Like primary insurance, reinsurance is a mechanism for spreading risk. A reinsurer takes some portion of the

More information

GN47: Stochastic Modelling of Economic Risks in Life Insurance

GN47: Stochastic Modelling of Economic Risks in Life Insurance GN47: Stochastic Modelling of Economic Risks in Life Insurance Classification Recommended Practice MEMBERS ARE REMINDED THAT THEY MUST ALWAYS COMPLY WITH THE PROFESSIONAL CONDUCT STANDARDS (PCS) AND THAT

More information

(Official Gazette of Montenegro, No 01/13 of 3 January 2013) GENERAL PROVISION. Article 1

(Official Gazette of Montenegro, No 01/13 of 3 January 2013) GENERAL PROVISION. Article 1 Pursuant to Article 83 paragraph 6, Article 87 and Article 177 item 4 of the Law on Insurance (Official Gazette of the Republic of Montenegro, No 78/06 and 19/07 and Official Gazette of Montenegro, No

More information

Accrual Accounting and Valuation: Pricing Earnings

Accrual Accounting and Valuation: Pricing Earnings Security, Third Chapter Six LINKS Accrual Accounting and : Pricing Earnings Link to previous chapter Chapter 5 showed how to price book values in the balance sheet and calculate intrinsic price-to-book

More information

WORKERS COMPENSATION RATEMAKING PROCESSES OF THE NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC.

WORKERS COMPENSATION RATEMAKING PROCESSES OF THE NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. WORKERS COMPENSATION RATEMAKING PROCESSES OF THE NATIONAL COUNCIL ON COMPENSATION INSURANCE, INC. JANUARY 2014 CONTENTS 1. Introduction... 1 Scope... 1 Overview of the NCCI Ratemaking Methodology... 2

More information

SOA Health 2007 Spring Meeting Valuation and Reserving Techniques

SOA Health 2007 Spring Meeting Valuation and Reserving Techniques SOA Health 2007 Spring Meeting Valuation and Reserving Techniques Property & Casualty Reserving Techniques Theresa Bourdon, FCAS, MAAA CAS Statement of Principles Regarding P&C Loss and Loss Adjustment

More information

The Statement of Cash Flows

The Statement of Cash Flows CHAPTER The Statement of Cash Flows OBJECTIVES After careful study of this chapter, you will be able to: 1. Define operating, investing, and financing activities. 2. Know the categories of inflows and

More information

Financial Review. 16 Selected Financial Data 18 Management s Discussion and Analysis of Financial Condition and Results of Operations

Financial Review. 16 Selected Financial Data 18 Management s Discussion and Analysis of Financial Condition and Results of Operations 2011 Financial Review 16 Selected Financial Data 18 Management s Discussion and Analysis of Financial Condition and Results of Operations 82 Quantitative and Qualitative Disclosures About Market Risk 90

More information

WCIRB Report on June 30, 2014 Insurer Experience Released: September 11, 2014

WCIRB Report on June 30, 2014 Insurer Experience Released: September 11, 2014 Workers Compensation Insurance Rating Bureau of California WCIRB Report on June 3, 214 Insurer Experience Released: September 11, 214 WCIRB California 525 Market Street, Suite 8 San Francisco, CA 9415-2767

More information

Risk-Based Capital. Overview

Risk-Based Capital. Overview Risk-Based Capital Definition: Risk-based capital (RBC) represents an amount of capital based on an assessment of risks that a company should hold to protect customers against adverse developments. Overview

More information

REINSURANCE ISSUES FOR SUPERVISORS. by Richard Smith Chief Manager General Insurance Australian Prudential Regulation Authority

REINSURANCE ISSUES FOR SUPERVISORS. by Richard Smith Chief Manager General Insurance Australian Prudential Regulation Authority REINSURANCE ISSUES FOR SUPERVISORS by Richard Smith Chief Manager General Insurance Australian Prudential Regulation Authority Background My comments are made in the context of general (non-life) insurance

More information

SYLLABUS OF BASIC EDUCATION Fall 2016 Basic Techniques for Ratemaking and Estimating Claim Liabilities Exam 5

SYLLABUS OF BASIC EDUCATION Fall 2016 Basic Techniques for Ratemaking and Estimating Claim Liabilities Exam 5 The syllabus for this four-hour exam is defined in the form of learning objectives, knowledge statements, and readings. set forth, usually in broad terms, what the candidate should be able to do in actual

More information

6. It lengthened its payables period, thereby shortening its cash cycle.

6. It lengthened its payables period, thereby shortening its cash cycle. Answers to Concepts Review and Critical Thinking Questions 1. These are firms with relatively long inventory periods and/or relatively long receivables periods. Thus, such firms tend to keep inventory

More information

Measurement of Incurred but Unreported Deaths in Life Settlements Donald F. Behan

Measurement of Incurred but Unreported Deaths in Life Settlements Donald F. Behan Measurement of Incurred but Unreported Deaths in Life Settlements Donald F. Behan ABSTRACT The traditional application of incurred but unreported insurance claims adds unreported claims to the reported

More information

Best Estimate of the Technical Provisions

Best Estimate of the Technical Provisions Best Estimate of the Technical Provisions FSI Regional Seminar for Supervisors in Africa on Risk Based Supervision Mombasa, Kenya, 14-17 September 2010 Leigh McMahon BA FIAA GAICD Senior Manager, Diversified

More information

Scaffold Industry Insurance Company Risk Retention Group, Inc. GOVERNMENT OF THE DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE, SECURITIES AND BANKING

Scaffold Industry Insurance Company Risk Retention Group, Inc. GOVERNMENT OF THE DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE, SECURITIES AND BANKING GOVERNMENT OF THE DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE, SECURITIES AND BANKING REPORT ON EXAMINATION Scaffold Industry Insurance Company Risk Retention Group, Inc. AS OF DECEMBER 31, 2009 NAIC

More information

The pitfalls of EVA. Esa Mäkeläinen 24.6.1998 E-mail: Esa.Makelainen@iki.fi EVA is a registered trademark of Stern Stewart & Co.

The pitfalls of EVA. Esa Mäkeläinen 24.6.1998 E-mail: Esa.Makelainen@iki.fi EVA is a registered trademark of Stern Stewart & Co. The pitfalls of EVA Although EVA is a value based measure, and it gives in valutions exactly same answer as discounted cash flow, the periodic EVA values still have some accounting distortions That is

More information

GLOSSARY. A contract that provides for periodic payments to an annuitant for a specified period of time, often until the annuitant s death.

GLOSSARY. A contract that provides for periodic payments to an annuitant for a specified period of time, often until the annuitant s death. The glossary contains explanations of certain terms and definitions used in this prospectus in connection with the Group and its business. The terms and their meanings may not correspond to standard industry

More information

Decision Analysis. Here is the statement of the problem:

Decision Analysis. Here is the statement of the problem: Decision Analysis Formal decision analysis is often used when a decision must be made under conditions of significant uncertainty. SmartDrill can assist management with any of a variety of decision analysis

More information

A Pricing Model for Underinsured Motorist Coverage

A Pricing Model for Underinsured Motorist Coverage A Pricing Model for Underinsured Motorist Coverage by Matthew Buchalter ABSTRACT Underinsured Motorist (UIM) coverage, also known as Family Protection coverage, is a component of most Canadian personal

More information

The Water and Power Employees Retirement Disability and Death Benefit Insurance Plan

The Water and Power Employees Retirement Disability and Death Benefit Insurance Plan The Water and Power Employees Retirement Disability and Death Benefit Insurance Plan Review of the Death Benefit Fund as of July 1, 2014 Family Death Benefit Allowance Fund Supplemental Family Death Benefit

More information

Department of Consumer & Business Services Oregon Insurance Division 5 350 Winter St. NE Salem, Oregon 97301-3883 Phone (503) 947-7983

Department of Consumer & Business Services Oregon Insurance Division 5 350 Winter St. NE Salem, Oregon 97301-3883 Phone (503) 947-7983 Department of Consumer & Business Services Oregon Insurance Division 5 350 Winter St. NE Salem, Oregon 97301-3883 Phone (503) 947-7983 WORKERS COMPENSATION FORMS RATES FOR ADVISORY LOSS COST MODIFICATION

More information

Featured article: Evaluating the Cost of Longevity in Variable Annuity Living Benefits

Featured article: Evaluating the Cost of Longevity in Variable Annuity Living Benefits Featured article: Evaluating the Cost of Longevity in Variable Annuity Living Benefits By Stuart Silverman and Dan Theodore This is a follow-up to a previous article Considering the Cost of Longevity Volatility

More information

Health Care Receivables Follow-up Study

Health Care Receivables Follow-up Study Health Annual Statement New Exhibit 3A Health Care Receivables Follow-up Study F. Kevin Russell, FSA, MAAA Chairperson, Health Care Receivables Factors Work Group Susan Mateja, FSA, MAAA Member, Health

More information

October 27, 2010. Dear Madame Secretary:

October 27, 2010. Dear Madame Secretary: October 27, 2010 The Honorable Kathleen Sebelius Secretary U.S. Department of Health and Human Services 200 Independence Avenue, S.W. Washington, DC 20201 Dear Madame Secretary: On behalf of the National

More information

INSURANCE. Moving towards global insurance accounting

INSURANCE. Moving towards global insurance accounting IFRS NEWSLETTER INSURANCE Issue 31, November 2012 The redeliberations are winding down, with an exposure draft in sight next year. Field and user input will be key in evaluating the operationality of the

More information

Estimation of Adjusting and Other Expense Reserves Utilizing Limited Historical Claim Report, Payment, and Closing Transaction Patterns

Estimation of Adjusting and Other Expense Reserves Utilizing Limited Historical Claim Report, Payment, and Closing Transaction Patterns Estimation of Adjusting and Other Expense Reserves Utilizing Limited Historical Claim Report, Payment, and Marc Pearl, FCAS, MAAA Peter Tomopoulos, ACAS, MAAA Abstract: The estimation of adjusting and

More information

Obligation-based Asset Allocation for Public Pension Plans

Obligation-based Asset Allocation for Public Pension Plans Obligation-based Asset Allocation for Public Pension Plans Market Commentary July 2015 PUBLIC PENSION PLANS HAVE a single objective to provide income for a secure retirement for their members. Once the

More information

BASLE CAPITAL ACCORD: TREATMENT OF POTENTIAL EXPOSURE FOR OFF-BALANCE-SHEET ITEMS

BASLE CAPITAL ACCORD: TREATMENT OF POTENTIAL EXPOSURE FOR OFF-BALANCE-SHEET ITEMS BASLE CAPITAL ACCORD: TREATMENT OF POTENTIAL EXPOSURE FOR OFF-BALANCE-SHEET ITEMS Basle Committee on Banking Supervision Basle April 1995 The treatment of potential exposure for off-balance-sheet items

More information

Basel Committee on Banking Supervision. Working Paper on the IRB Treatment of Expected Losses and Future Margin Income

Basel Committee on Banking Supervision. Working Paper on the IRB Treatment of Expected Losses and Future Margin Income Basel Committee on Banking Supervision Working Paper on the IRB Treatment of Expected Losses and Future Margin Income July 2001 Working Paper on the IRB Treatment of Expected Losses and Future Margin

More information

Valuation Actuary Symposium September 23-24, 2013 Indianapolis, IN. 29 PD, New Health Care Receivables Exhibit. Moderator: F Kevin Russell FSA,MAAA

Valuation Actuary Symposium September 23-24, 2013 Indianapolis, IN. 29 PD, New Health Care Receivables Exhibit. Moderator: F Kevin Russell FSA,MAAA Valuation Actuary Symposium September 23-24, 2013 Indianapolis, IN 29 PD, New Health Care Receivables Exhibit Moderator: F Kevin Russell FSA,MAAA Presenters: Susan Lynn Mateja FSA,MAAA,FCA Session 29PD

More information

Compliance with the NAIC Life Insurance Illustrations Model Regulation

Compliance with the NAIC Life Insurance Illustrations Model Regulation Actuarial Standard of Practice No. 24 Compliance with the NAIC Life Insurance Illustrations Model Regulation Revised Edition Developed by the Task Force to Revise ASOP No. 24 of the Life Committee of the

More information

General Insurance Reserving Actuarial Best Estimates and Proxy Methods

General Insurance Reserving Actuarial Best Estimates and Proxy Methods General Insurance Reserving Actuarial Best Estimates and Proxy Methods A commentary from Actuarial Profession s General Insurance Reserving Oversight Committee (GI ROC) January 2008 GI Board: Reserving

More information

1.2 Linear Equations and Rational Equations

1.2 Linear Equations and Rational Equations Linear Equations and Rational Equations Section Notes Page In this section, you will learn how to solve various linear and rational equations A linear equation will have an variable raised to a power of

More information

Living with New Accounting Rules for Postemployment Medical Benefits

Living with New Accounting Rules for Postemployment Medical Benefits Living with New Accounting Rules for Postemployment Medical Benefits by Anna M. Rappaport, F.S.A. The Environment Today In the United States, medical care for the aged is provided partly through Medicare,

More information

Actuarial Society of India

Actuarial Society of India Actuarial Society of India EXAMINATION 30 th October 2006 Subject ST1 Health and Care Insurance Specialist Technical Time allowed: Three hours (14.15* pm 17.30 pm) INSTRUCTIONS TO THE CANDIDATE 1. Enter

More information

Session 54 PD, Credibility and Pooling for Group Life and Disability Insurance Moderator: Paul Luis Correia, FSA, CERA, MAAA

Session 54 PD, Credibility and Pooling for Group Life and Disability Insurance Moderator: Paul Luis Correia, FSA, CERA, MAAA Session 54 PD, Credibility and Pooling for Group Life and Disability Insurance Moderator: Paul Luis Correia, FSA, CERA, MAAA Presenters: Paul Luis Correia, FSA, CERA, MAAA Brian N. Dunham, FSA, MAAA Credibility

More information

USING A CLAIM SIMULATION MODEL FOR RESERVING & LOSS FORECASTING FOR MEDICAL PROFESSIONAL LIABILITY. By Rajesh V. Sahasrabuddhe, FCAS, MAAA

USING A CLAIM SIMULATION MODEL FOR RESERVING & LOSS FORECASTING FOR MEDICAL PROFESSIONAL LIABILITY. By Rajesh V. Sahasrabuddhe, FCAS, MAAA USING A CLAIM SIMULATION MODEL FOR RESERVING & LOSS FORECASTING FOR MEDICAL PROFESSIONAL LIABILITY By Rajesh V. Sahasrabuddhe, FCAS, MAAA Abstract Various recent papers have included criticisms related

More information

A Methodology for Calculating the Opportunity Cost of Layered Sovereign DRFI Strategies

A Methodology for Calculating the Opportunity Cost of Layered Sovereign DRFI Strategies IMPACT APPRAISAL FOR SOVEREIGN DISASTER RISK FINANCING AND INSURANCE PROJECT: PHASE 1 ACTUARIAL AND REINSURANCE, PAPER 1 A Methodology for Calculating the Opportunity Cost of Layered Sovereign DRFI Strategies

More information

How To Calculate Financial Leverage Ratio

How To Calculate Financial Leverage Ratio What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? HOCK international - 2004 1 HOCK international - 2004 2 How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated? HOCK

More information

INSURANCE (LINKED LONG TERM INSURANCE BUSINESS) RULES 2014 ARRANGEMENT OF RULES

INSURANCE (LINKED LONG TERM INSURANCE BUSINESS) RULES 2014 ARRANGEMENT OF RULES INSURANCE (LINKED LONG TERM INSURANCE BUSINESS) RULES 2014 ARRANGEMENT OF RULES PART I PRELIMINARY 1. Citation 2. Interpretation 3. Application of the Rules PART II GENERAL REQUIREMENTS 4. Establishment

More information

Article from: Long-Term Care. December 2003 Issue 10

Article from: Long-Term Care. December 2003 Issue 10 Article from: Long-Term Care December 2003 Issue 10 Decmber 2003, Issue No. 10 Long-Term Care News The Newsletter of the Long-Term Care Insurance Section Published by the Society of Actuaries Long-Term

More information

Credibility and Pooling Applications to Group Life and Group Disability Insurance

Credibility and Pooling Applications to Group Life and Group Disability Insurance Credibility and Pooling Applications to Group Life and Group Disability Insurance Presented by Paul L. Correia Consulting Actuary paul.correia@milliman.com (207) 771-1204 May 20, 2014 What I plan to cover

More information

FASB / IASB Insurance Contracts Project Update Webinar

FASB / IASB Insurance Contracts Project Update Webinar FASB / IASB Insurance Contracts Project Update Webinar November 1, 2012 International Accounting Standards Task Force Insurance Contracts Project Update 1 Presenters Noel Harewood, MAAA, FSA; Member, International

More information

THE CHALLENGE OF PRICING EXTENDED WARRANTIES. Author: Timothy L. Schilling

THE CHALLENGE OF PRICING EXTENDED WARRANTIES. Author: Timothy L. Schilling Title: THE CHALLENGE OF PRICING EXTENDED WARRANTIES Author: Timothy L. Schilling Biography: The author is a Consulting Actuary with Tillinghast, a Towers Perrin company. He is a Fellow of the Casualty

More information

Private Passenger Automobile. Analysis of No-Fault Legislative Reforms. Michigan. On Behalf of the Insurance Institute of Michigan

Private Passenger Automobile. Analysis of No-Fault Legislative Reforms. Michigan. On Behalf of the Insurance Institute of Michigan Private Passenger Automobile Analysis of No-Fault Legislative Reforms Michigan On Behalf of the Insurance Institute of Michigan by Michael J. Miller, FCAS, MAAA EPIC Consulting, LLC June 2007 Private Passenger

More information

5000 Public Personal Injury Compensation Plans

5000 Public Personal Injury Compensation Plans 5000 Public Personal Injury Compensation Plans Page 5001 Table of Contents 5000 Public Personal Injury Compensation Plans.5001 5100 Scope... 5003 5200 Extension of scope... 5004 5300 General... 5005 5310

More information

EXPLANATORY NOTES FOR TWO PLANS ARE BETTER THAN ONE

EXPLANATORY NOTES FOR TWO PLANS ARE BETTER THAN ONE EXPLANATORY NOTES FOR TWO PLANS ARE BETTER THAN ONE Page 1 Page 2 As with most partnerships in life, there are match s of strengths with weaknesses. This is the case with adding on a Cash Balance Plan

More information

Swedish life insurance model facing major challenges

Swedish life insurance model facing major challenges Swedish life insurance model facing NFT major /2008 challenges Swedish life insurance model facing major challenges by Erik Alm, Malcolm Campbell, Alexander Dollhopf and Sören Kruse In May 2007, the International

More information

CHAPTER 45-04-12 VALUATION OF LIFE INSURANCE POLICIES

CHAPTER 45-04-12 VALUATION OF LIFE INSURANCE POLICIES CHAPTER 45-04-12 VALUATION OF LIFE INSURANCE POLICIES Section 45-04-12-01 Applicability 45-04-12-02 Definitions 45-04-12-03 General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves

More information

Insurance Contracts 1

Insurance Contracts 1 Indian Accounting Standard (Ind AS) 104 Insurance Contracts 1 (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold type indicate

More information

TESTING THE ASSUMPTIONS OF AGE-TO-AGE FACTORS. Abstract

TESTING THE ASSUMPTIONS OF AGE-TO-AGE FACTORS. Abstract TESTING THE ASSUMPTIONS OF AGE-TO-AGE FACTORS GARY G. VENTER Abstract The use of age-to-age factors applied to cumulative losses has been shown to produce least-squares optimal reserve estimates when certain

More information

Financial Evolution and Stability The Case of Hedge Funds

Financial Evolution and Stability The Case of Hedge Funds Financial Evolution and Stability The Case of Hedge Funds KENT JANÉR MD of Nektar Asset Management, a market-neutral hedge fund that works with a large element of macroeconomic assessment. Hedge funds

More information

VALUATION OF LIFE INSURANCE POLICIES MODEL REGULATION (Including the Introduction and Use of New Select Mortality Factors)

VALUATION OF LIFE INSURANCE POLICIES MODEL REGULATION (Including the Introduction and Use of New Select Mortality Factors) Table of Contents Model Regulation Service October 2009 VALUATION OF LIFE INSURANCE POLICIES MODEL REGULATION (Including the Introduction and Use of New Select Mortality Factors) Section 1. Section 2.

More information

November 2007. Comment Letter. Discussion Paper: Preliminary Views on Insurance Contracts

November 2007. Comment Letter. Discussion Paper: Preliminary Views on Insurance Contracts November 2007 Comment Letter Discussion Paper: Preliminary Views on Insurance Contracts The Austrian Financial Reporting and Auditing Committee (AFRAC) is the privately organised standard-setting body

More information

Session 11: Reinsurance Accounting

Session 11: Reinsurance Accounting Session : Reinsurance Accounting US GAAP for International Life Insurers Hong Kong August 7 Charles Carroll, Ernst & Young Reinsurance Accounting Common Types of Reinsurance Accounting Guidance Short Duration

More information

Policyholder Protection In Mutual Life Insurance Company Reorganizations

Policyholder Protection In Mutual Life Insurance Company Reorganizations Policyholder Protection In Mutual Life Insurance Company Reorganizations Introduction This practice note was prepared by a work group organized by the Committee on Life Insurance Financial Reporting of

More information

Financial Review. 16 Selected Financial Data 18 Management s Discussion and Analysis of Financial Condition and Results of Operations

Financial Review. 16 Selected Financial Data 18 Management s Discussion and Analysis of Financial Condition and Results of Operations Financial Review 16 Selected Financial Data 18 Management s Discussion and Analysis of Financial Condition and Results of Operations 80 Quantitative and Qualitative Disclosures About Market Risk 86 Consolidated

More information

VOL. XLVIII, Part I No. 89 PROCEEDINGS. May 3-5, 1961 RESERVES FOR REOPENED CLAIMS ON WORKMEN'S COMPENSATION INTRODUCTION

VOL. XLVIII, Part I No. 89 PROCEEDINGS. May 3-5, 1961 RESERVES FOR REOPENED CLAIMS ON WORKMEN'S COMPENSATION INTRODUCTION VOL. XLVIII, Part I No. 89 PROCEEDINGS May 3-5, 1961 RESERVES FOR REOPENED CLAIMS ON WORKMEN'S COMPENSATION BY RAFAL J. BALCAREK INTRODUCTION Reopening of closed claims occurs in most lines of insurance,

More information

INSURANCE TERMS AND DEFINITIONS

INSURANCE TERMS AND DEFINITIONS INSURANCE TERMS AND DEFINITIONS Adjudication: The act of determining an issue or settling a dispute in court. Allocated Loss Adjustment Expenses (ALAE): Expenses directly attributable to specific claims.

More information

MANAGEMENT OPTIONS AND VALUE PER SHARE

MANAGEMENT OPTIONS AND VALUE PER SHARE 1 MANAGEMENT OPTIONS AND VALUE PER SHARE Once you have valued the equity in a firm, it may appear to be a relatively simple exercise to estimate the value per share. All it seems you need to do is divide

More information

Subject ST2. CMP Upgrade 2013/14

Subject ST2. CMP Upgrade 2013/14 ST2: CMP Upgrade 2013/14 Page 1 Subject ST2 CMP Upgrade 2013/14 CMP Upgrade This CMP Upgrade lists the most significant changes to the Core Reading and the ActEd material since last year so that you can

More information

Compliance with the NAIC Valuation of Life Insurance Policies Model Regulation with Respect to Deficiency Reserve Mortality

Compliance with the NAIC Valuation of Life Insurance Policies Model Regulation with Respect to Deficiency Reserve Mortality Actuarial Standard of Practice No. 40 Compliance with the NAIC Valuation of Life Insurance Policies Model Regulation with Respect to Deficiency Reserve Mortality Developed by the Task Force on XXX Regulation

More information