Statutory accounting (Q13)

[jk]

We're turning up a number of disagreements in the numeric answers thread; let's start some individual threads on these and see if we can hash them out. For Q13, you have

-3000 UW gain
+ 2475 inv gain
+ 2500 realized CG
- 500 PH dividends
- 1250 income taxes
- (22500-21000) increase in non-admitted assets
- (900 - 600) increase in excess of statutory over statement reserves
+ (500 -350) increase in foreign exchange provisions

= -1425 / beginning surplus of 25000 = -5.7%.

This question seemed like it wandered over from Course 7 by mistake . . . but that is how you do statutory income, yes? No?

[frank_exams]

We're turning up a number of disagreements in the numeric answers thread; let's start some individual threads on these and see if we can hash them out. For Q13, you have

-3000 UW gain
+ 2475 inv gain
+ 2500 realized CG
- 500 PH dividends
- 1250 income taxes
- (22500-21000) increase in non-admitted assets
- (900 - 600) increase in excess of statutory over statement reserves
+ (500 -350) increase in foreign exchange provisions

= -1425 / beginning surplus of 25000 = -5.7%.

This question seemed like it wandered over from Course 7 by mistake . . . but that is how you do statutory income, yes? No?

If it helps, that's exactly what I got.

Frank

[J_C]

We're turning up a number of disagreements in the numeric answers thread; let's start some individual threads on these and see if we can hash them out. For Q13, you have

-3000 UW gain
+ 2475 inv gain
+ 2500 realized CG
- 500 PH dividends
- 1250 income taxes
- (22500-21000) increase in non-admitted assets
- (900 - 600) increase in excess of statutory over statement reserves
+ (500 -350) increase in foreign exchange provisions

= -1425 / beginning surplus of 25000 = -5.7%.

This question seemed like it wandered over from Course 7 by mistake . . . but that is how you do statutory income, yes? No?

Doesn't "increase in excess of statutory over statement reserves" only apply pre-2001 (codification)?

[tommie frazier]

i got the -5.7% too. but am unsure if I was right. I think someone in the numeric answers thread had differnt. might have been avi.

[Plant Food]

Doesn't "increase in excess of statutory over statement reserves" only apply pre-2001 (codification)?

Yes, but the paper was written in 1992. Someone should have caught that before it made its way onto the exam. Alternatively, they could have made the 2004 and 2005 values zero.

[Avi]

Per Roth's paper, net change in assets should be added, I think, not subtracted:

http://img526.imageshack.us/img526/8347/rothnz7.png

?

[glad]

I got exactly -5.7% also.

Since they gave excess statutory reserves, I used it.

[glad]

change in non-admitted assets is calculated as last year minus this year, so that if they go up, it's a charge against surplus.

[Avi]

change in non-admitted assets is calculated as last year minus this year, so that if they go up, it's a charge against surplus.

:wall:

[dodgers00]

change in non-admitted assets is calculated as last year minus this year, so that if they go up, it's a charge against surplus.

Are change in liability for reinsurance, change in foreign exchange, change in excess statutory reserves also calculated the same way, ie last year's value - this year's value?

[Retriever]

Easier to remember to use current value - prior yr value for each of those and that they are all subtracted in the calculation.

[Jim James]

This is Q13 from what?

Thanks.

[Retriever]

From the 2006 exam.