ASOPs

Question 1

purpose of ASOP 41

Answer 1

[Actuarial Communications]
provides guidance on actuarial communication - written, electronic, or oral - issued with respect to actuarial services
(does not apply when no actuarial finding exists)

Question 2

three relevant audiences for actuarial communications

Answer 2

• intended user - any user the actuary identifies as one who is able to rely on the actuarial findings
• other user - any recipient who is not an intended user
• principal - client or employer of the actuary

Question 3

considerations for actuarial communications (4)

Answer 3

• form
• content
• clarity
• reasonable timing

Question 4

standard of clarity for an actuarial report

Answer 4

sufficient for another qualified actuary to assess the reasonableness of the work

Question 5

disclosures for ASOP 41 (6)

Answer 5

• identification of the responsible actuary
• date and subject of the actuarial documents
• disclosures in actuarial reports: intended users, scope, purpose, limitations, etc.
• assumptions or methods prescribed by law
• reliance on other sources
• deviations from ASOP guidance

Question 6

purpose of ASOP 43

Answer 6

[P&C Unpaid Claim Estimates]
provides guidance on estimation of loss and LAE for unpaid claims, when unpaid claim estimates are communicated as actuarial findings

Question 7

three possible purposes of an unpaid claim estimate

Answer 7

• external financial reporting
• internal management reporting
• scenario analysis

Question 8

what the actuary should do if constraints create the risk that a more detailed analysis would produce a materially different result

Answer 8

notify the principal and communicate the constraints

Question 9

factors that should be reflected in an unpaid claim estimate analysis (4)

Answer 9

• methods and models used
• sensitivity of assumptions
• changing conditions, including economic, regulatory, judicial, and political conditions
• uncertainty from model risk, parameter risk, and process risk

Question 10

disclosures for ASOP 20 or 43 (4)

Answer 10

• intended purpose
• relevant dates: accounting, valuation, and review dates
• limitations that may have materially impacted results
• significant risks and uncertainties
• per ASOP 41: assumptions or methods prescribed by law; reliance on other sources; deviations from ASOP guidance

Question 11

specific disclosures for ASOP 20 or 43 that may be required (2)

Answer 11

• if a range of estimates is provided, disclose the basis of the range
• if the estimate is an update, disclose the change in assumptions, procedures, methods, or models and reasons for the change

Question 12

purpose of ASOP 36

Answer 12

[Statements of Actuarial Opinion on P&C Loss and LAE Reserves]
provides guidance on issuing a written statement of actuarial opinion regarding loss and LAE reserves

Question 13

purpose of ASOP 20

Answer 13

[Discounting P&C Unpaid Claim Estimates]
* provides guidance on discounting unpaid claim estimates to present value, when unpaid claim estimates are communicated as actuarial findings

Question 14

considerations for assumption of timing of future payments for discounting reserves (3)

Answer 14

• a range of timing estimates may be reasonable
• assumptions should be internally consistent
• understand sensitivity around assumptions

Question 15

three possible approaches for selection of discount rate

Answer 15

• use a rate close to the risk-free rate
• portfolio approach: anticipated return on a selected asset portfolio
• rates requested by another party

Question 16

specific disclosures for ASOP 20 (3)

Answer 16

• selected discount rate assumptions with basis and effect of income taxes
• difference between discounted and undiscounted reserve estimates
• whether discounted reserve estimate includes a risk margin