Hi, I have looked at the examiners report for this question and it does not explain how they calculated the DAC or the UPR net of DAC for this question. Can anyone help with this?
Hi Assuming policies are written uniformly throughout the year then the average policy starts on 1 July meaning on 31 December half a year's premium will be unearned. Therefore DAC for company A is 0.5*.38*152 =28.88 and for company B it's 0.5*1112*0.23 = 127.88. UPR net DAC is 0.5*.62*152 and 0.5*1112*0.77 for companies A and B respectively.
Just remember that the numbers should be rounded to the dollar coz you can't get more accurate than the information provided.
