Last Push

May 4th, 2012

Work hard this weekend. Write out solutions. Get fast.

I wanted to note for those that haven’t seen it, the CAS posted a sample high level Bloom’s question a couple of weeks ago. It is at the top of http://www.casact.org/admissions/

I wouldn’t worry a lot about these questions. If you know the material, it shouldn’t be an issue. I think the CAS sample answer is really long. I posted my sample answer in the top section of the Ratemaking Study Manual tab. Expect to see a couple of these longer questions on the exam. Likely topics are covered in Werner chapters 9, 10, 13 and Friedland’s Changing Environment and Ch. 15 selecting the IBNR. Again, if you know the material, these questions will be no issue. What can cause you trouble is over-writing. Make sure to note the point value, and spend adequate time, but not so much that you end up leaving questions blank on the exam. You must finish the exam.

Good luck.

Ken Uncategorized

A few extra notes

April 27th, 2012

I have added a short video for Friedland Appendix A. I had removed it because it was an old video and all of the material is covered in various Friedland chapters, but decided to record a quick video for those who just want to hear the material.

Werner Chapter 4 Video - For 6-month policies, the Chapter 5 video (see video one discussing 1996 #31 at about the 24 minute mark) shows the current text method of measuring inforce exposures. I didn’t remember that it was in the Chapter 4 video. Please use the study manual (the Ch 4 study manual is correct), text, and 1996 #31 for this issue and disregard the section of the Chapter 4 video.

Ken Uncategorized

A few more fixes

April 24th, 2012

PE1 #3 - The definition of operating expense ratio doesn’t match the current text. This should be better stated as u/w expense ratio.

PE1 #24b - The LAS(4M xs 1M) is calculated here. Note that when we doing this to calculate the ILF, we must multiply by the prob that the loss hits the layer, in this case we would use 6/10. So, usually we just some our loss in the layer and divide by 10. This was a little tricky.

PE1 Reserving - 9b - The third reason (buying higher policy limits) really isn’t discussed enough for the current syllabus. The development technique is likely to understate not overstate.

Ratemaking Quiz 14 - This is actually downloaded from the Quiz 13 link. My numbering is off. I posted this as a comment to the prior post, but I don’t think many of you open the comments, so I will re-post.

Sorry. My version on my computer is different from the version on the website. You should use column (5) not (4) in the final calcs.

(1) (2)=1.025^(1) (3) (4)=1.045^(3) (5)=(2)*(4) (6) (7) =
Accident Curr Cost Curr Trend Proj Cost Proj Trend Loss Trend LDF Rpt Loss *
Year Trend Period Factor Trend Period Factor Factor to Ultimate (5)*(6)*1.02
2006 4 1.1038 2.5 1.1163 1.2322 1.000 6,912,642
2007 3 1.0769 2.5 1.1163 1.2021 1.002 8,600,160
2008 2 1.0506 2.5 1.1163 1.1728 1.008 7,114,374
2009 1 1.0250 2.5 1.1163 1.1442 1.028 7,558,503
2010 0 1.0000 2.5 1.1163 1.1163 1.090 8,439,496

Total = 38,625,174

Ken Uncategorized

Fixes to Quizzes, Practice Exams, Friedland 7

April 9th, 2012

I have made the following minor fixes to the practice quizzes and exams.

Ratemaking Quizzes

Quiz 4 #2 – Just changed some wording in the answer. No change to the numerical answer

Quiz 9 #2 – Updated the Net Rpt Loss Assuming 250 Ded to match for the $250 deductible. This also changed the solution: LER = 0.114

Quiz 12 #1 – Rate change should be 4/1/09 not 3/1/09

Reserving Quiz

Quiz 4 #2 Solution – Changed headers to “Trend to 2010” not 2008. The answer was correct.

Ratemaking Practice Exam 4

#17 – Should be 525,000 in net loss in problem for Full Coverage.

Ratemaking Practice Exam 5

#24 – The first bullet point should read “Policy being rated is a January 1, 2010 – December 31, 2010 occurrence policy.”

Reserving Practice Exam 1

#8 – Changed wording in solution to say, “Average” instead of “Most Recent Diagonal.”

Friedland Chapter 7, 2011#24 - Minor typo - AY 2010 @12 months changed to 128 (instead of 129)

Ken Uncategorized

Errata - Additional Ratemaking Questions

April 7th, 2012

A few weeks ago, I posted 14 additional ratemaking questions. I had several formula errors in my Excel spreadsheet. I have posted a corrected version. The following outlines the corrections.

#4 - I removed the 12-ult development factor for 2011. I also had to fix the trend factors used.

#7.6 - Premium @CRL for Class 2 corrected to 1.8 million. The new selected relativity for Class 2 is 1.08.

#10b - Corrected solution to use a loss of $30,000

#12 - Corrected solution to use Rpt Loss & AAE of 275,000

#14 - Corrected credit risk = 1% * 2.2M * 88% = 19,360

Ken Uncategorized

Exams Available from Fall 2011 Sitting

March 4th, 2012

This isn’t news about Exam 5, but if you took Exam 6 or Exam 8 last fall and received a 4 or 5, you can request a copy of your exam answers. The request deadline is March 7.

http://casact.org/members/index.cfm?fa=viewArticle&articleID=1866&CFID=28158991&CFTOKEN=32552179

They have also extended the appeal deadline. This is old news to many of you, but I wanted to make sure those that haven’t seen it were aware.

Ken Uncategorized

News 2-6-2012

February 6th, 2012

I have added a study guide for Werner Appendix A and new videos for Chapter 14.  I am currently recording new videos for Feldblum.  I should have the first couple ready Thursday.  After Feldblum, I will post a study guide for Appendix B and record videos for App A & B.  In the coming weeks, I will post study guides for Apps C & D and videos.

Good luck studying.

Ken News

Errata 1/11/2012

January 11th, 2012

I have corrected some typos and formatting errors listed below. These items were fixed in the Werner study manuals on January 11, 2012. If you printed the study manuals before this date, there is a new file with the corrected pages that you can print and replace in your manual. The page numbering in Chapter 5 will be off by one after inserting the solution to 2006#26.

Chapter 5
• Modified diagrams to be more readable on pp. 4-6, 9
• 2006#26 – Add comment on solution
• 2011#4b – Last part should be (1 + 0.75 + 0.5 + 0.25)
• New Problem #2 – Fixed a formatting error

Chapter 6
• 2008#19 – the revised effective comp rate formula should be (0.35)(0.5) + (0.09)(1.0) + (0.61)(2/3) = 0.6717
• 2009#22 – Fixed a formatting error on problem
• 2009#22c – the formula is missing + signs before the case reserves of 0 and $50k. The answer is correct

Chapter 8
• 2006#36a – Answer is missing a negative sign (i.e., should be -10.8%)
• 2011#9a – The premium trend factors should be 1.015^2 and 1.015^3

Chapter 9
• 2011#15 – Fixed an Excel formula in solution

UPDATE 1-12-2012

I have also updated the CAS Ratemaking Principles.  I corrected the solution to the 2006 problem and added a solution to the 2009 problem.  These corrections are not in the Errata packet.  Plus, I uploaded the study manual for Friedland Appendix A & B.

Ken Errata

News 12-16-11

December 16th, 2011

All of the Ratemaking manuals, problems, quizzes and exams have been updated. The notecards have not changed from last year. I will need to record new lessons for Chapter 14 because of changes made to the manual. Plus, I am rerecording Feldblum. All other videos are good to go.

For Reserving, most of the manuals, problems, and quizzes have been updated. I am working on Chapters 15-17 of Friedland, and I will have these posted by Wednesday next week.

Some notes:
1. Everything that is posted is good for the 2012 syllabus;
2. I plan on recording videos for Werner 14, Werner App A-E, Feldblum Asset Share, and Friedland 15 in January; and
3. I may make some slight tweaks to the quizzes and practice exams. This would be in January also.

Happy Holidays!

Ken News

One Suggested Study Method

November 18th, 2011

Here is an introduction post from last sitting.  This is the way I would approach an exam.

If you are registered for the online seminar, you will have access to the “Lessons” tab, which includes the online videos and mp3 downloadable files.  You will also have access to the material in the “Study Manual” tab.  The study manual includes outlines, past exam problems, and new problems.  In the study manual section, you will also find a suggested study schedule, notecards, quizzes and practice exams.  There are tabs for both ratemaking and reserving, depending on the seminar you are taking.  If you are only attending the live seminar, you will have access to all of the material in the study manual section.

Here are some comments on how I would approach studying for this exam.

1. I always suggest reading the article first. I typically like to mark on the reading (yellow highlighter, notes in the margin). Remember, you don’t have to understand everything on your first pass through, so don’t spend too much time on any one article.

2. I like going through the past exam problems just to see the kind of problems I’m looking at. I work them if I can, but again, I don’t spend too much time on any one problem. I usually don’t look at the most recent problems, saving them for later, unless there just aren’t any other questions. I like to mark the text where I find the answers with a blue highlighter. Anything in blue or green (because it was marked in yellow from 1.) has been asked before. I just need to understand the past exam questions. Anything that remains in yellow is something I thought looked important during my first pass but hasn’t been asked yet. I liked writing my own problems from this material and saving them for my second pass. You could also make notecards (or edit the ones I provide) and/or mark the study manual if you prefer.

3. Here is where the videos come in for some people. Some students like using them during their first pass. I would have probably used them on my second pass. I liked getting through all the readings as quickly as possible on the first pass.

4. I would always start in early January and plan to be through my first pass by about February 28.  Note that if you are only taking half the exam, you won’t need to start so early.  The second pass is where I think the videos work really well. On the second pass, I would watch the videos, work the problems with the videos, and then go through all of the problems (past, new, and ones that you write). Now you can work on understanding the material. However, note that you need to cover the material twice as quickly on your second pass. I like to be through this pass by about April 1. You should really feel comfortable with the material after this.

5. In April, this is where you need to log the hours. Make sure you can work every problem/question from the past and new problems section. Rewatch videos for sections that are still giving you trouble. Finally – memorize. April can make the difference between a 5 and a 6.

6. I usually want you to feel good about the material before dipping into the quizzes. It is most effective to take these under test type conditions. I usually take the past exams and practice exam starting about 1-2 weeks before. Again, it is important to use exam like conditions. If you haven’t worked the 2010 exam problems, it is a good indication of how you can expect to feel when taking the exam. Timing is crucial when taking an exam. Work on timing on the quizzes and practice exams. I have seen many students get 5s because they didn’t get to the last 3 or 4 questions. Write thorough answers, but don’t fail because you spent half an hour on a problem. I usually target about 2 – 3 mins per point when practicing problems.

7. The audio files fit in wherever you find them most effective (driving/riding into work, cleaning the house, at work).

I’m sure I forgot a few things. Please note – the method to use is what works best for you. I would usually target about 15 hours per week in January and February, 15-20 in March, and 20-25 in April. Of course, it is less important how long you studied, and more important how well you studied. When I took part 10, I was not ready two weeks before the exam and was forced into about 120 or so hours in the last two weeks (it killed me). Never give up. Study until that last day.

Good luck.

Ken General, News, Ratemaking, Reserving