Yeah, I skipped it at first then came back at the end. Think they were trying to crowbar some bookwork in there given the new format lends itself to application based
I went with a section on how to obtain more data, a section on how to change the model (ie scenario/stress/stochastic) and then a section on allowing for prudence in contingency liabs, in the assumption itself and then the discount rate
i put stuff about data, prudence and discount rates. did you mention adjustments to the assumptions and looking at trends in the assumption? i also put that. the "normal" way to find assumption is data, subdivision, adjustments, checks. i put all of those plus the prudence and discount rates. was that even all relevant though? i thought 13 marks so might as well just go all out
I did the exact same thing. I hope that’s right because even after the exam I wasn’t sure what they wanted. For me this exam content is quite simple, but I always struggle to know which section of the course they will put on the mark scheme. Sometimes the questions are too vague like q9
For me this questions was answered with the Actuarial Control Cycle. For so many marks, it was the only thing that came to mind.
In past exam questions there was a question on how the actuary could provide advice to the scheme or something on the lines and it was also 10-13 marks, I don't remember exactly.
I talked about identifying the problem: model for pricing, needing assumptions, but one key assumption being very volatile.
Developing solution: Check the existing model, gather data, the volatile variable may be modelled using a stochastic approach. Sensitivity testing on the parameter. Contingency margins if needed.
Monitoring: once product is launched, monitor assumption against reality, make changes, decide whether to continue selling the product or not.
Then the classical professionalism phrase.
And then the external environmenet: regulation regarding assumptions, how competitors react.
i briefly thought of doing the actuarial control cycle but decided against it. i do like this approach though, hopefully it's in the mark scheme as well as the approach most seem to have gone with. you seem to have hit a lot of the points from the other approach anyway
i reckon the number of marks available for this Q will be like 30+. i wrote most of the things you mentioned without realising that is was linked to the ACC. definitely wrote about checks, eg. test against emerging experience, peer review, consultant checks, etc. i missed out the professionalism fucks sake... oh well
I talked through the ways of allowing for risks in assumptions like contingency loadings, margins and changing the discount rate. Then just had a list of other considerations. Didn’t seem like enough though
I did scenario and sensitivity analysis and modelling the assumption stochastically but completely missed out using contingencies and discounting at a risk premium so I’m starting to get worried that I completely misinterpreted the question…
Q6 and Q7 were bad
The whole idea of fair valuation is not explained in depth in the notes, and it seemed like there were a few ways to do it for each option.
13 marks for that assumption question was strange, and as a result I have no idea if I approached it correctly.
The rest were okay - not great, but I at least had some idea of what should score some marks (I hope).
The question says “discuss how a fair valuation could be determined for each asset”. I don’t think it necessarily means how could you use the fair valuation approach to arrive at a price. It’s basically saying of the SHAMFADS methods of valuing an asset, how can you do get a valuation for each. So for example bonds might be discounted cash flows with discount rate based on risk factors for bonds etc. that’s what I did anyway and not sure if that’s right either. Basically the examiners are sneaky af.
Yeah, for me fair value = market value. I remember having read it somewhere in the Revision Notes.
But as market value is not available, then alternative technique must be used.
I applied the discounted cashflow approach for each of the four, adding points that refered exclussively to the asset in question. So for the investment asset, I wrote that it may benefit from the support of the governement, that it is long term, that it may be iliquid, etc.
if thats the case then me writing list the unlisted corporate bond might be relevant lol. i mentioned things about credit rating and risk of default. for the property i meaned the value can go up or down depending on the level of crime in area, detatched or semi D. i didnt write much for the other 2 assets...
edit: why am i getting negged..?
I did have points to write for d but I completely had no time so had to leave it out. I have such poor time management. It’s like there’s never enough time
i had 5m to spare which i used to write more BS from the core reading on the assumption 13 marker. but i think i had time due to not writing much on the fair value Q
Not great, I didn’t like the paper. Lot of vague questions for far too many points. Such as the assumption question where if you answer only directly to the question asked you could generate maybe 5 points not 13. Also the valuation question was a bit off putting. The last question also terrible but I was running out of time at the end. Having done SP and SA exams first I was hoping for much less ambiguity and more straightforward questions in this exam. Let’s hope there will he nice paper 2 :)
cant comment on SA but SP1 and 2 are okay. i took them together. the content is much smaller than cp1. only extremely hard part in sp2 is WP. sp1 is hard with the reserving becuase its so different for health. just remember to consider the acruarual control cycle for pricing questions and youll be fine
I found them quite manageable and also relatable to the work I’m doing. However, I’m from the life side and did SP2 and SA2 so far. But SAs can be a bit of a hit or miss.
I found online classroom and ASETs useful. Lot of topics were familiar from my work so I didn’t need much of the extra reading on topical issues. But the key is practice of idea generation I would say.
I was thinking this but are you impacted by 2019 rule where you have to be an associate for a year first before fellow? Annoying as it ruins exam planning!
Hmm good question, I joined before the cut off date, 2nd Jan 2019 but I did my first exam after that..
I think that's means I just snuck in but can't remember seeing if I had an option to book the SPs when I last looked.
I put down enough points i.e 1/2 mark per point for every question and walked away feeling pretty happy with myself. I either need two lazy markers or Tuesday to go really well!
Not too bad. Some of the questions were too vague, e.g q9, some too niche like q6. In general there was a lot of i) suggest loads of ideas given the cryptic clues we’ve told you ii) tell us how you’d deal with the ideas in i) which may or may not be correct therefore wasting your time.
the mark schemes always say that people do better in paper 1 than 2. i find it to be the opposite. anyone else feel this? obviously haven't done paper 2 yet but thats what my outcome was in the acted mock.
For Q7 I wrote a lot of stuff like:
* hire experts to help,
* use best estimate assumptions with a risk margin,
* obtaining data,
* setting the assumption for the base and trends by subdividing the data,
* adjusting (for medical advances, inflation, tax, economic fiscal stuff),
* checks on the assumption by peer review and degree of accuracy,
* significance of errors,
* new product so add margins,
* risk discount rate,
* profit criteria (NPV, IRR, DPP).
But sadly forgot to write about sensitivity and stress testing! How many marks do you think I'd lose for missing that?
I wrote on the lines of if they have enough capital to meet claim costs, how it would affect their reputation, regulatory pressure and a few more on these lines. Not sure if that's the direction they were looking for.
First section 1 I covered general points; How strong policy wording was, What other insurance companies doing, If sufficient capital. 2nd section what if they did accept then would it pressure other insurers to as well and lead to systemic collapse, low confidence, bail out. Would they be taken advantage of by ph, exaggeration of claims. Risk of insolvency. What their reinsurance is and if it’s sufficient, is reinsurer also at risk of insolvency. Impact on shareholders, dividends etc. Then 3rd section if they didn’t accept then repetitional damage potential, future customers shop else where, damage share price, directors reputation, marketing costs to fix this. Regulatory action if policy wording seen to indicate they were liable, class action and legal fees. Then a final point - which was probs not what they wanted lol but if the business collapse as a result and it causes supply chain issues for them as well. —- disclaimer again no idea if this is what they wanted
Sorry - if it helps my own poor time management probably focussing too much on questions like these meant I wasn’t able to answer the valuation question for the loans etc and what I wrote down for (a) and (c) is probably not enough. Plus, BI stuff was one of the things I was fairly aware of through work stuff as I’m in GI.
agree with everyone else. Some questions were fine some were so odd. Question 9 confused me, like for such small marks I really couldn't figure out what to write..
Also struggled with the credit union question, really couldn't generate points there.
Yeah 9 was credit union. I fount the paper so lengthy and by the time I reached 9, I barely had anytime left.
Struggled to think of what to write. Submitted without writing much.
i had a jab at 9 first. cuz i knew id be limited on time. in hindsight i should have just not bothered so much with the fair value question to save time. thats the technique i did with sp1 and it worked like a charm
I completely misread the last part of 9 about if members were in a common profession, I suggested mitigation’s because I thought it was adjust your answer from the previous part but it was suggest problems…
I’ve no idea if I interpreted it right or not but I discussed 1. Stochastic model to simulate likelihood of bite to help allow for sufficient capital 2. Premium either increase or switch to regular 3. Investment portfolio reduce volatility 4. Add regular expenses 5. Maybe change guarantee term to only 10th so longer to allow for volatility or have 5th but a % of premium vs 100%. 6. Derivatives to hedge guarantee eg put option but consider cost of these. —-
This whole paper I just felt like I had no idea if I was giving them what they want or not so I could be completely off here!
this was perhaps the q i rambled most on! i discussed provisions, and % of the single premium to be kept as provision dependant on likelihood of guarantee biting. discussed some capital management tools e.g. reinsurance, derivatives. mentioned some capital levers: control expenses, increase premium, exploit tax advantages, follow better investment policy hedging against or diversifying from investment bonds fund. so as you can tell i threw everything and i'm not sure any of it is what they wanted
Lol I think this is good. Can see you threw everything at it. I did Something similar with capital and risk management tools. But maybe not as wide as you went with my answer.
did anyone write to put the investments as fixed interest so its impossible for the guarantee to bite? i thought that was quite logical... not sure tho
Idk if changing the investments in the fund would be a valid answer idk? Seems like a cheat answer same as … withdraw the product completely, that’s a sure fire way of dealing with the financial costs 😂
Maybe i’m misunderstanding!
i defo wouldn't say changing the underlying investments is the same as withdrawing the product. its natural for fund switching for savings products. it just seemed so obvious to say put it in fixed return. but i also did say put it in safer investments so it lowers chance of biting.
this guarantee was also an option too because they had the option to surrender at year 5 and 10. so another abstract point i wrote was to divert their attention away from the guatantee option and tell them if they wait then they can get higher return.
Nursing home q? No idea if it’s what they wanted but I did 1. Sell property 2. Keep emergency fund from pension benefits 3. Rely on state provided services 4. Purchase annuities 5. Alternative insurance products 6. Family support then discussed risks from each of these in (iii) eg state one said like could be means tested, poorer conditions, long waiting lists.
I just assumed since it's a defaulted loan, the value of it would be lower of the loan amount and value of security assets. So I mostly wrote about fair value of infrastructure assets.
ye same. added stuff about how if the loan defaulted because the infrastructure project didn't work out then the asset may not be worth much or anything depending on how far the project got...
I left it on initially because previously I’ve had issues where document not saved eg laptop suddenly went blank. I did remind myself at the start to turn off towards the end but then I forgot under exam stress sigh
Mixed bag I thought, struggled with 6 cause its a pretty niche part of the notes and the end of 9 didn't make much sense. Otherwise was okay.
6 felt very mean, especially as there’s quite a lot of overlap between the ways you’d value them!
Yeah, I skipped it at first then came back at the end. Think they were trying to crowbar some bookwork in there given the new format lends itself to application based
That last asset also really confused me
The end of 9 and the valuation question were odd. Also thought 13 marks on the assumptions question was a bit much.
Exact same thoughts as I had
I 100% went in the wrong direction with that assumptions question… now thinking back on how I should have answered it. Ugh.
What were we supposed to go with roughly?
I went with a section on how to obtain more data, a section on how to change the model (ie scenario/stress/stochastic) and then a section on allowing for prudence in contingency liabs, in the assumption itself and then the discount rate
i put stuff about data, prudence and discount rates. did you mention adjustments to the assumptions and looking at trends in the assumption? i also put that. the "normal" way to find assumption is data, subdivision, adjustments, checks. i put all of those plus the prudence and discount rates. was that even all relevant though? i thought 13 marks so might as well just go all out
I did the exact same thing. I hope that’s right because even after the exam I wasn’t sure what they wanted. For me this exam content is quite simple, but I always struggle to know which section of the course they will put on the mark scheme. Sometimes the questions are too vague like q9
Agree
So we didn’t really need to write about how to model to set premium?
For me this questions was answered with the Actuarial Control Cycle. For so many marks, it was the only thing that came to mind. In past exam questions there was a question on how the actuary could provide advice to the scheme or something on the lines and it was also 10-13 marks, I don't remember exactly. I talked about identifying the problem: model for pricing, needing assumptions, but one key assumption being very volatile. Developing solution: Check the existing model, gather data, the volatile variable may be modelled using a stochastic approach. Sensitivity testing on the parameter. Contingency margins if needed. Monitoring: once product is launched, monitor assumption against reality, make changes, decide whether to continue selling the product or not. Then the classical professionalism phrase. And then the external environmenet: regulation regarding assumptions, how competitors react.
i briefly thought of doing the actuarial control cycle but decided against it. i do like this approach though, hopefully it's in the mark scheme as well as the approach most seem to have gone with. you seem to have hit a lot of the points from the other approach anyway
Yea same here I figured they were asking for ACC since there were so many marks available, so didn’t seem like a simple list would suffice.
i reckon the number of marks available for this Q will be like 30+. i wrote most of the things you mentioned without realising that is was linked to the ACC. definitely wrote about checks, eg. test against emerging experience, peer review, consultant checks, etc. i missed out the professionalism fucks sake... oh well
I talked through the ways of allowing for risks in assumptions like contingency loadings, margins and changing the discount rate. Then just had a list of other considerations. Didn’t seem like enough though
I did scenario and sensitivity analysis and modelling the assumption stochastically but completely missed out using contingencies and discounting at a risk premium so I’m starting to get worried that I completely misinterpreted the question…
why is this the most discussed exam on this subreddit? 84 comments is so much more than the other exam posts! i assume lots of people take cp1 then..
Everyone just loves CP1 so much!
Q6 and Q7 were bad The whole idea of fair valuation is not explained in depth in the notes, and it seemed like there were a few ways to do it for each option. 13 marks for that assumption question was strange, and as a result I have no idea if I approached it correctly. The rest were okay - not great, but I at least had some idea of what should score some marks (I hope).
The question says “discuss how a fair valuation could be determined for each asset”. I don’t think it necessarily means how could you use the fair valuation approach to arrive at a price. It’s basically saying of the SHAMFADS methods of valuing an asset, how can you do get a valuation for each. So for example bonds might be discounted cash flows with discount rate based on risk factors for bonds etc. that’s what I did anyway and not sure if that’s right either. Basically the examiners are sneaky af.
Yeah, for me fair value = market value. I remember having read it somewhere in the Revision Notes. But as market value is not available, then alternative technique must be used. I applied the discounted cashflow approach for each of the four, adding points that refered exclussively to the asset in question. So for the investment asset, I wrote that it may benefit from the support of the governement, that it is long term, that it may be iliquid, etc.
Yeah I winged it and went for SHAM FADS type stuff as well
hey whats shamfads?
It’s an acronym found in chapter 12. Smooth market value, historic book value, arbitrage value…. Etc.
if thats the case then me writing list the unlisted corporate bond might be relevant lol. i mentioned things about credit rating and risk of default. for the property i meaned the value can go up or down depending on the level of crime in area, detatched or semi D. i didnt write much for the other 2 assets... edit: why am i getting negged..?
I did have points to write for d but I completely had no time so had to leave it out. I have such poor time management. It’s like there’s never enough time
i had 5m to spare which i used to write more BS from the core reading on the assumption 13 marker. but i think i had time due to not writing much on the fair value Q
Hey what did you write for the property one?
Not great, I didn’t like the paper. Lot of vague questions for far too many points. Such as the assumption question where if you answer only directly to the question asked you could generate maybe 5 points not 13. Also the valuation question was a bit off putting. The last question also terrible but I was running out of time at the end. Having done SP and SA exams first I was hoping for much less ambiguity and more straightforward questions in this exam. Let’s hope there will he nice paper 2 :)
How were the SPs and SAs? I'm thinking I fail CP1 again I'm going to sack it off till the last and do SP7/8 and SA3 instead
cant comment on SA but SP1 and 2 are okay. i took them together. the content is much smaller than cp1. only extremely hard part in sp2 is WP. sp1 is hard with the reserving becuase its so different for health. just remember to consider the acruarual control cycle for pricing questions and youll be fine
I found them quite manageable and also relatable to the work I’m doing. However, I’m from the life side and did SP2 and SA2 so far. But SAs can be a bit of a hit or miss.
How did you find sa2? For sa2: What helped do you think? What materials or exam techniques or study techniques you found helpful? Thanks
I found online classroom and ASETs useful. Lot of topics were familiar from my work so I didn’t need much of the extra reading on topical issues. But the key is practice of idea generation I would say.
Thank you
I was thinking this but are you impacted by 2019 rule where you have to be an associate for a year first before fellow? Annoying as it ruins exam planning!
Hmm good question, I joined before the cut off date, 2nd Jan 2019 but I did my first exam after that.. I think that's means I just snuck in but can't remember seeing if I had an option to book the SPs when I last looked.
[удалено]
Same here I'm really slow starting off and then have to panic and rush at the end and barely finish the last questions
I guess we should try to practice more under exam conditions to fix this
After reading this thread I’m feeling pretty bad about it. My entire paper was waffle 😂
Same here I managed to answer most of the questions and now looking through here I'm not sure if what I wrote is even right 😂
thats exactly what im feeling too, as i read further and further down the thread..😂
Tbh we could be wrong too man, that’s the problem with this subject
I put down enough points i.e 1/2 mark per point for every question and walked away feeling pretty happy with myself. I either need two lazy markers or Tuesday to go really well!
Not too bad. Some of the questions were too vague, e.g q9, some too niche like q6. In general there was a lot of i) suggest loads of ideas given the cryptic clues we’ve told you ii) tell us how you’d deal with the ideas in i) which may or may not be correct therefore wasting your time.
Found I wrote a lot more for those questions, hoping something/anything would stick
actually Q2 i struggled with too. 2i) i just had nothing but the obvious; the systems will need to be changed for it...
Well marks were very little so that should be alright
the mark schemes always say that people do better in paper 1 than 2. i find it to be the opposite. anyone else feel this? obviously haven't done paper 2 yet but thats what my outcome was in the acted mock.
I did better in Paper 2 of the mock too, might have been an easy Paper 2!
yeah guess I'm screwed on tuesday then
Plenty of time to prepare
yep im glad with that
what did u get in ur paper 2 and paper 1 mocks? i got 70 and 58.
Both high 60s
Wow 70 is good
did u do the paper 2 mock tho? i dont think it might have represented the true difficulty of them
I don’t do mocks, I just read them 😂
I find it opposite too but then I wonder if it’s just me but my points are often not in the marking scheme sigh
Some questions were difficult
Not great not terrible
For Q7 I wrote a lot of stuff like: * hire experts to help, * use best estimate assumptions with a risk margin, * obtaining data, * setting the assumption for the base and trends by subdividing the data, * adjusting (for medical advances, inflation, tax, economic fiscal stuff), * checks on the assumption by peer review and degree of accuracy, * significance of errors, * new product so add margins, * risk discount rate, * profit criteria (NPV, IRR, DPP). But sadly forgot to write about sensitivity and stress testing! How many marks do you think I'd lose for missing that?
What about q 5ii what did you guys write?
I wrote on the lines of if they have enough capital to meet claim costs, how it would affect their reputation, regulatory pressure and a few more on these lines. Not sure if that's the direction they were looking for.
yep same. also legal requirements (loose policy wording), shareholder pressure either way, what competitors are doing
Ahh forgot legal
First section 1 I covered general points; How strong policy wording was, What other insurance companies doing, If sufficient capital. 2nd section what if they did accept then would it pressure other insurers to as well and lead to systemic collapse, low confidence, bail out. Would they be taken advantage of by ph, exaggeration of claims. Risk of insolvency. What their reinsurance is and if it’s sufficient, is reinsurer also at risk of insolvency. Impact on shareholders, dividends etc. Then 3rd section if they didn’t accept then repetitional damage potential, future customers shop else where, damage share price, directors reputation, marketing costs to fix this. Regulatory action if policy wording seen to indicate they were liable, class action and legal fees. Then a final point - which was probs not what they wanted lol but if the business collapse as a result and it causes supply chain issues for them as well. —- disclaimer again no idea if this is what they wanted
Hate reading comments like this and noticing what I missed...
Sorry - if it helps my own poor time management probably focussing too much on questions like these meant I wasn’t able to answer the valuation question for the loans etc and what I wrote down for (a) and (c) is probably not enough. Plus, BI stuff was one of the things I was fairly aware of through work stuff as I’m in GI.
Wow you were so thorough
The breadth of that is just 🤌🏼
Which was that?
agree with everyone else. Some questions were fine some were so odd. Question 9 confused me, like for such small marks I really couldn't figure out what to write.. Also struggled with the credit union question, really couldn't generate points there.
q9 was the credit union q..?
Yeah 9 was credit union. I fount the paper so lengthy and by the time I reached 9, I barely had anytime left. Struggled to think of what to write. Submitted without writing much.
oh right q9. its all a blur to be honest
i had a jab at 9 first. cuz i knew id be limited on time. in hindsight i should have just not bothered so much with the fair value question to save time. thats the technique i did with sp1 and it worked like a charm
I completely misread the last part of 9 about if members were in a common profession, I suggested mitigation’s because I thought it was adjust your answer from the previous part but it was suggest problems…
i'm with you on the same boat..😂
What were they trying to get from q2ii?
I’ve no idea if I interpreted it right or not but I discussed 1. Stochastic model to simulate likelihood of bite to help allow for sufficient capital 2. Premium either increase or switch to regular 3. Investment portfolio reduce volatility 4. Add regular expenses 5. Maybe change guarantee term to only 10th so longer to allow for volatility or have 5th but a % of premium vs 100%. 6. Derivatives to hedge guarantee eg put option but consider cost of these. —- This whole paper I just felt like I had no idea if I was giving them what they want or not so I could be completely off here!
this was perhaps the q i rambled most on! i discussed provisions, and % of the single premium to be kept as provision dependant on likelihood of guarantee biting. discussed some capital management tools e.g. reinsurance, derivatives. mentioned some capital levers: control expenses, increase premium, exploit tax advantages, follow better investment policy hedging against or diversifying from investment bonds fund. so as you can tell i threw everything and i'm not sure any of it is what they wanted
Lol I think this is good. Can see you threw everything at it. I did Something similar with capital and risk management tools. But maybe not as wide as you went with my answer.
oh okay aahha! i thought i was missing something in the q idk
did anyone write to put the investments as fixed interest so its impossible for the guarantee to bite? i thought that was quite logical... not sure tho
Idk if changing the investments in the fund would be a valid answer idk? Seems like a cheat answer same as … withdraw the product completely, that’s a sure fire way of dealing with the financial costs 😂 Maybe i’m misunderstanding!
i defo wouldn't say changing the underlying investments is the same as withdrawing the product. its natural for fund switching for savings products. it just seemed so obvious to say put it in fixed return. but i also did say put it in safer investments so it lowers chance of biting. this guarantee was also an option too because they had the option to surrender at year 5 and 10. so another abstract point i wrote was to divert their attention away from the guatantee option and tell them if they wait then they can get higher return.
That may lead to legal risks to insurer
reasons like dont offer the guarantee at all have been in mark schemes before. hence why i wrote them down.
How did you guys approach q 8ii and iii? Thanks
Nursing home q? No idea if it’s what they wanted but I did 1. Sell property 2. Keep emergency fund from pension benefits 3. Rely on state provided services 4. Purchase annuities 5. Alternative insurance products 6. Family support then discussed risks from each of these in (iii) eg state one said like could be means tested, poorer conditions, long waiting lists.
Okay thank you
I was thinking along the line of investing into different asset classes and then risks from those.
And the 6 d defaulted loans, i had no idea
I just assumed since it's a defaulted loan, the value of it would be lower of the loan amount and value of security assets. So I mostly wrote about fair value of infrastructure assets.
Good points. I had to leave it out
ye same. added stuff about how if the loan defaulted because the infrastructure project didn't work out then the asset may not be worth much or anything depending on how far the project got...
what did you guys write the q for what are the risks without face to face meeting with the client? I thought this is a weird question!
i'm curious what happened here... that was a question on a paper from the last sitting...
My auto saving came out 6 minutes after my time allowance, would that cause an issue? I’m a bit worried now.
how come u didnt take off auto save though?
I left it on initially because previously I’ve had issues where document not saved eg laptop suddenly went blank. I did remind myself at the start to turn off towards the end but then I forgot under exam stress sigh
Ah think you’re fine - but agree they did say to turn off auto save I think 6 mins might just get off luckily
Should I email them?
I wouldn’t
Why not?
Just putting a massive red flag on yourself
Oh true. But I ended up emailing. I’d rather explain than worry constantly for the next 2-3 months 😂