2010 Question #26

[MOUSSLEEEN]

Under part c) I was wondering why the required capital does not increase by 2% of the ceded unpaid claims.

I understand that the margin required for net unpaid claims has to increase by 5%*net unpaid = 2500$.

But I would have add a 2%*50 000$ to the required capital. Since on p. 30.71it add to required capital 2% of unpaid claims for ceded reinsurance.

Thanks!

[herr blau]

We discussed this one at work while reviewing and we agreed that the CAS solution is wrong. Your approach is the correct one.

[MOUSSLEEEN]

I just received an answer from the AMF and my approach is OK.

So CAS is wrong. Is it too late to report the error to the CAS?

[herr blau]

I would assume that the appeal period is over, seeing as the last sitting was 1.5 years ago. But you could still ask them to correct their solution.