• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Sept 2015 Question 5iii

L

Laura

Very Active Member
Hi everyone,

understand that there is an additional level of correlation between underwriting risk and liquidity risk and that relationship may be relatively complex to model as it would only tend to materialise in the tail. However am not sure what the following means/relates to:
". . . with any outcomes that are within ULR expectations
. . . or below any level of additional free assets required
. . . or that do not have any specific reinsurance recoveries that need additional funding
. . . not being likely to generate significant liquidity risk issues"

Would you be able to explain further on this?

Thanks in advance for your help!
 
That's a long sentence Laura. Let's try rephrasing it:

The relationship may be relatively complex to model as it would only tend to materialise in the tail.

The following outcomes probably won't generate significant liquidity risk:
  • any outcomes that are within ULR expectations
  • outcomes that are below any level of additional free assets required
  • outcomes where specific reinsurance recoveries don't need additional funding.
Click to expand...

See how that helps?
 
You must log in or register to reply here.
Back
Top