Difference between revisions of "ASOP.20"
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: '''portfolio yield''': | : '''portfolio yield''': | ||
: - this is the average yield on investments within a selected asset portfolio | : - this is the average yield on investments within a selected asset portfolio | ||
| − | : - this method provides better matching of liabilities & assets ''(assuming the timing of asset earnings | + | : - this method provides better matching of liabilities & assets ''(assuming the timing of asset earnings matches the payment pattern of the reserve liabilities)'' |
: '''selection by another party''': | : '''selection by another party''': | ||
| + | : - the actuary uses a rate selected by someone else | ||
| + | : - the actuary must disclose this ''(or be held responsible for the selection)'' | ||
| + | |||
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Revision as of 19:24, 7 April 2019
ASOP 20, Discounting of Property/Casualty Unpaid Claim Estimates, provides guidance to the actuary related to services involving discounting of unpaid claim estimates for P&C coverages.
Study Tips
BattleTable
Based on past exams, the main things you need to know (in rough order of importance) are:
- this reading has not been tested on any exam from the year 2012 and subsequent
reference part (a) part (b) part (c) part (d) no prior questions
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In Plain English!
| Question: given an undiscounted reserve estimates, what components are required to calculate the corresponding discounted reserve |
- payment pattern (recoverables should be considered when developing a payment pattern)
- discount rate
| Question: briefly describe 3 possible methods for selecting a discount rate |
- risk-free rate:
- - this is the rate of return from a hypothetical investment with no risk
- - in practice it would be the rate of return for a very low risk investment with a timing pattern similar to the payment pattern for the given reserve liabilities
- portfolio yield:
- - this is the average yield on investments within a selected asset portfolio
- - this method provides better matching of liabilities & assets (assuming the timing of asset earnings matches the payment pattern of the reserve liabilities)
- selection by another party:
- - the actuary uses a rate selected by someone else
- - the actuary must disclose this (or be held responsible for the selection)
Full BattleQuiz You must be logged in or this will not work.
