Questions on CIA Standards of Practice

[ajstudies]

p. 2009; GRASP p. 157: Methods to adjust liabilities for the time value of money. Can anyone explain these to me in American English? ;)

p 2011; GRASP p. 158: Accounting in the income statement. What are "actuarial liabilities" vs. "other policy liabilities"?

p. 2025; GRASP p. 160: The term of the liab. ...ends at the ealier of the first renewal or adjustment date... at which there is no constraint..." What does "no constraint" mean?

Also of note: There are two notecards which address scenarios where a margin for adverse deviation should be added. One of these is for economic assumptions (p. 2035/164) and the other is for non-economic assumptions (p. 2037/166). This had me confused until I went back to the actual article.

[cubedbee]

p. 2009; GRASP p. 157: Methods to adjust liabilities for the time value of money. Can anyone explain these to me in American English? ;)



The Actuarial Present Value method is just the normal present value calculation where you use a single discount rate v to discount all future cash flows.

The Canadian Asset Liability Method(CALM) is a much more complex method where multiple interest rate scenarios are run, and they compute an initial policy liability such that the future value at the time of the last cash flow is 0. Section 2300 describes the method in more detail.

These two are equivalent if there for simple scenarios, but the CALM can incorporate scenarios like a future interest rate spike which can’t be modeled using a single discount rate.

[ajstudies]

Thank you!

[ajstudies]

BTW, there are a TON of lists for this note. Any guesses on which ones are the most important? Is there any way to consolidate some of these?

[Willie Mosconi]

:bump: I'm having some trouble getting my hands around this paper and fitting it in with the other reserves, specifically claim reserves. Any thoughts on the best way to tackle it? Thanks.

[Chandrachick]

What level of testing could be on all of the prescribed interest rate scenarios? I keep glossing over these since it's so much information to memorize all 9 scenarios and it just doesn't seem worth it with everything else I need to do. Any thoughts?

[Lar Jep]

I don't think this is worth spending too much time on. I'm focusing on the purpose, scope, and general contents, and the differences between these standards and the ASOPs. I'm saving my brain for more important things.