Be careful. Unless I completely missed the boat, I believe that an
explanation provided by NEAS in their study aid (99-10-8) entitled
"Philbrick and Accounting for Risk Margins" is misleadingly incorrect,
with respect to Underwriting Risk.
on p. 12 of Philbrick "Acctg for Risk Margins," Underwriting Risk is
defined as follows...
"For the purpose of this paper, underwriting risk represents the
possibility that DISCOUNTED actual losses exceed the LOSS PORTION of the
premium."
on p. 7 of NEASSA#99-10-8, query 1 has a false definition but it is
remarked to be true.
again on p.8 and 9, a question deals with the topic. The NEAS aid is
consistent with its previous error. In this example, the right answer
to the question (query 1 from 1998 exam #5) is reached, but for the
wrong reasons. To make matters worse, the NEAS aid comments on how
unusual Philbrick's statement is.
Unless there is another definition in the paper that I have not found (a
possibility), be aware of this. If I missed something, please let me
know before May 6th.
Jeff
--Reach me via ICQ!My ICQ# is 25073609.