Analysis Of SURPLUS

Question 1

Reasons for Analysis of surplus

Answer 1

I underSTAND VARIAbility

*investment returns maximising
*surplus distribution
>recurring and non-recurring
*Trends
>feedback into the ACC
*Assumptions of financial significance
*new business effects
>especially hpw it is bring valued
*DIVERGENCE
> actual vs expected
* total description of variance
* accounts that are published
*executive remuneration scheme
> reward for good performance
*independent checks
>data
>assumptions
>calcs
> process
>recon
*Assumptions validation

Question 2

Analysis of Surplus process

Answer 2

1. Assumptions & data
2. Projecting cashflow
3. Building models
4. Comparison of models
5. Comparison of expenses

Question 3

Levers of surplus

Answer 3

Relict
*renewal
> encourage more renewals
* Expenses
>control of Expenses
*likelihood of claim
> reduce likelihood
>uw etc
* investment return
*cost of claims
* taxation

Question 4

Factors that affect surplus

Answer 4

*insurance ass
>mortality
> morbidity
> lapses
>frequency
>severity
*investment
> return
> inflation
> Expenses
> taxation
*business
>commission
> salary growth
>premium
> new business

Question 5

Key considerations for surplus distribution (life)

Answer 5

SPACES
*shareholders
*Policyholder
*adverse events
* capital
*external stakeholders
*other stakeholders

Question 6

Benefit scheme surplus use

Answer 6

scheme rules

*benefit
*contribution
*sponsor

#legislation
#discretion
#taxation

*industrial relations
*risk exposure
*speed of correction
*source of surplua