TIA’s Exam 5 Blog

I have also posted this in the forum http://www.theinfiniteactuary.com/mb/viewtopic.php?f=15378&t=2764

I suggest that you read the proposed CAS Part 5 Study Schedule in the “Getting Started Section.”

Online Seminar Tab

Here you will find all of the study manuals, video lessons, and audio files.

The study manuals are broken down by chapter and are at the top of each section. Just click the green arrow to download. This will download the pdf (and sometimes Excel files for the Werner appendices) to your computer. You can print this or view them on your computer or mobile device. If you prefer to download all of the files at once, you can do this by clicking the “Download All Handouts” button just above the “Getting Started Section.”

The videos can be viewed as QuickTime, Windows Media Player, or Flash. You can select this just to the right of the “Download All Handouts.”

You can download the mp3 audio files of the video lessons to lesson to on your mobile device. Just click the speaker icon, which is next to the button to view the videos.

Additional Material Tab

This is where you can download notecards, quizzes, and practice exams. I’m currently working on the quizzes and practice exams. However, you shouldn’t be looking at these anyway until your are more prepared for the exam. These are good tests to check your knowledge and your ability to quickly write out solutions.

Combined Files

I am adding the complete combined study manual here for those who want one huge file. This is the same material as the manuals on the “Online Seminar” tab, but combined. I am also adding a file that has just the outlines and one that has just the problems.

Live Seminar

If you are registered for the live seminar, there will be additional material here as the seminar gets closer.

New/Updated Lessons

Material shows up here that has been recently added or updated. This is the same material that you’ll find in the other tables with the new lesson orange plus and updated blue arrow.

Forum

The forum/message board is where you can ask specific questions on material. Students are also able to answer questions and discuss. This is the preferred method of asking question (over email). I will be checking the forum most work mornings from this point forward. On the forum,

I have also started a new topic in the Exam 5 – Online Seminar section called “Work in progress…” http://www.theinfiniteactuary.com/mb/viewtopic.php?f=64&t=2763

Here I will add items that I plan on adding or updating.

Remember that being an actuary is a good career. Hopefully, you’ll be working for many years. Studying will actually end up being a short time period in your career. Be happy. You are fortunate to have the ability and opportunity to study for these exams. The reward is worth it. Have a superior mindset and superior attitude.

Good luck studying.

Ken

Ken General, News

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

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

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

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

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

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

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

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

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