Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > General Actuarial
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions


Not looking for a job? Tell us about your ideal job,
and we'll only contact you when it opens up.
https://www.dwsimpson.com/register


General Actuarial Non-Specific Actuarial Topics - Before posting a thread, please browse over our other sections to see if there is a better fit, such as Careers - Employment, Actuarial Science Universities Forum or any of our other 100+ forums.

Reply
 
Thread Tools Display Modes
  #11  
Old 11-06-2017, 07:56 AM
Lenin Lenin is offline
Member
SOA
 
Join Date: Jul 2012
Location: Europa
Studying for ERM
Favorite beer: Free
Posts: 73
Default

Again, thanks for all your replies.
For the sake of documentation, Carter on Reinsurance does not help much either.
I am not implying that the uniqueness of the RI treaties is meant for dishonest purposes.
Reply With Quote
  #12  
Old 11-07-2017, 01:16 PM
DiscreteAndDiscreet DiscreteAndDiscreet is offline
Member
AAA
 
Join Date: May 2016
Posts: 392
Default

There is a book called Accounting Standards: True or False where the author develops the idea that the primary function of accounting is attesting that funds assigned to the custody of an organization have been properly handled and that coupling the measurement of economic value to accounting can't be handled in a uniform manner. His argument is that accounting standards, whether you use historical cost or fair value, implicitly assume that you are measuring an ergodic process where a snapshot of any one period gives you a picture of things that could happen in any other period. His suggested solution is to separate custodial accounting from performance measurement and require companies to disclose their business plans and their methodology for measuring performance relative to those plans.

You might say that finite risk contracts can be viewed as an attempt to implement that framework with a reinsurer underwriting (in the securities market sense) the business plan and performance measurement. A finite risk contract might implement a very sensible framework for evaluating performance, but the risk transfer rules limit the ability to recognize accruals under that framework if it's too dissimilar from the mandated framework. Most study materials are going to be about the mandated framework, although I guess ORSA might be an effective venue for incorporating evidence of solvency that is not allowed to be recognized in the mandated framework. Maybe you should poke around ORSA and ERM materials for discussions of information that can be reflected in those models that is disallowed in financial statements.

I don't work in insurance, I've just been studying some of this material for the sake of broadening my horizons.
Reply With Quote
  #13  
Old 11-07-2017, 01:40 PM
JMO's Avatar
JMO JMO is offline
Carol Marler
Non-Actuary
 
Join Date: Sep 2001
Location: Back home again in Indiana
Studying for Nothing actuarial.
Posts: 36,606
Default

Quote:
Originally Posted by DiscreteAndDiscreet View Post
There is a book called Accounting Standards: True or False where the author develops the idea that the primary function of accounting is attesting that funds assigned to the custody of an organization have been properly handled and that coupling the measurement of economic value to accounting can't be handled in a uniform manner. His argument is that accounting standards, whether you use historical cost or fair value, implicitly assume that you are measuring an ergodic process where a snapshot of any one period gives you a picture of things that could happen in any other period. His suggested solution is to separate custodial accounting from performance measurement and require companies to disclose their business plans and their methodology for measuring performance relative to those plans.

You might say that finite risk contracts can be viewed as an attempt to implement that framework with a reinsurer underwriting (in the securities market sense) the business plan and performance measurement. A finite risk contract might implement a very sensible framework for evaluating performance, but the risk transfer rules limit the ability to recognize accruals under that framework if it's too dissimilar from the mandated framework. Most study materials are going to be about the mandated framework, although I guess ORSA might be an effective venue for incorporating evidence of solvency that is not allowed to be recognized in the mandated framework. Maybe you should poke around ORSA and ERM materials for discussions of information that can be reflected in those models that is disallowed in financial statements.

I don't work in insurance, I've just been studying some of this material for the sake of broadening my horizons.
Interesting perspective. Thanks for posting.

ETA
Not the same argument, but a parallel one is that statutory accounting is incompatible with the economic facts of the business. When the discrepancy is too large (on the life insurance side, so-called Triple-X reserves are a glaring example), reinsurance is structured for the purpose of presenting result more consistent with economic truth.
__________________
Carol Marler, "Just My Opinion"

Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial.


My latest favorite quotes, updated Oct 13, 2017.

Spoiler:
I should keep these four permanently.
Quote:
Originally Posted by rekrap View Post
JMO is right
Quote:
Originally Posted by campbell View Post
I agree with JMO.
Quote:
Originally Posted by Westley View Post
And def agree w/ JMO.
Quote:
Originally Posted by MG View Post
This. And everything else JMO wrote.
And this all purpose permanent quote:
Quote:
Originally Posted by Dr T Non-Fan View Post
Yup, it is always someone else's fault.
MORE:
Quote:
Originally Posted by Bro View Post
I recommend you get perspective.
Quote:
Originally Posted by Enough Exams Already View Post
Dude, you can't fail a personality test. It just isn't that kind of test.
Quote:
Originally Posted by Locrian View Post
I'm disappointed I don't get to do both.

Last edited by JMO; 11-07-2017 at 01:57 PM..
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 05:53 AM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.17409 seconds with 11 queries