Chapter 9 - Qn 9.10

How did they calculate DAC in question 9.10

I tried treating it as unearned commission; also, as 55% of UPR carried forward to the next year.

In both the cases, the answers are not matching to the answer provided in the book. Can someone help me with the missing piece here, please.

Thanks

 

Thanks, Darren.

 

I have a query regarding the same question, so using the same thread.
When calculating the numbers for the 3-year accounting of Company B (the reinsurer) I could match all my answers to the solution except the following.

When 2017 claims reserve was released amounting to 4.05 this was recognised partially in 2018 and remainder in 2019. That is, 50% recognised in 2018 and 50% carried forward to its final year of account that is in 2019. First of all why 50-50? Is it because 2 open years of account are left so the recognition of the release is split equally?

And if so, why was this not replicated for the 2018 release of 12.27? Why was 66% of it amounting to 8.18 recognised in 2019 and only 33% carried forward?

As such, neither of these seemed intuitive to me, as I considered the recognition of surplus to be done equally across 3 Years of Account, so I would split these as 1/3rd. That is 33% in each year. So I think I am missing some crucial understanding here. Please correct me and help me gain better clarity on this aspect. Thanks...