ASOP 19 - Appraisals of Casualty, Health, and Life Ins Bus

Question 1

ASOP 19 - Recommended practices for performing actuarial appraisals (5)

Answer 1

1. When setting assumptions
   a. Consider historical experience, adjusted for trend and known environmental changes
   b. Ensure that each set of assumptions used is internally consistent
   c. Consider the circumstances, needs, and strategies of the intended audience
2. Consider displaying appraisal values using several discount rates
3. Perform validation tests to determine whether the model reasonably reproduces results
4. Address the sensitives of the appraisal value to changes in key assumptions
5. Provide documentation in sufficient detail that another actuary qualified in the same practice area can evaluate the reasonableness of the work

Question 2

ASOP 19 - Items included in an actuarial appraisal report (17)

Answer 2

1. The scope of the assignment and any limitations as to the availability of the data
2. The actuary’s principal (client or employer)
3. The duty, if any, that the actuary is assuming with respect to any user of the report other than the actuary’s principal
4. A description of the intended use of the report
5. A description of the business being valued
6. The appraisal date
7. An appraisal value or range of appraisal values
8. The methodology used to develop the appraisal and the reasons for the choice of methodology
9. The projection model, the accounting basis used, and other key items included in the analysis
10. The results of the model validation
11. A discussion of the level of capital reflected in the appraisal and how this level was determined
12. The assumptions, described in sufficient detail that another actuary qualified in the same practice area could evaluate their reasonableness
13. The source of any assumption selected by someone other than the actuary
14. The extent to which taxes have been considered and on what basis
15. Any sensitivity testing results deemed material by the actuary
16. The source and extent of reliance on information supplied by others
17. Disclosures in accordance with ASOP 41 if applicable