Assumptions Flashcards
1
Q
Assumptions needed to project forward profits in each future year for a life insurer
A
- Premium rates per policy
- Sales volumes and mix of business
- Investment returns
- Expense levels
- Expense inflation
- Commission rates
- Mortality rates
- Morbidity rates
- Withdrawal rates
- Separate assumptions to calculate provisions (which may be more prudent than those used above)
- Solvency capital requirements
- Tax returns
- Reinsurance premium rates and recovery rates
2
Q
Demographic factors (assumptions) needed for a pension scheme model
A
- rates of retirement in good health
- rates of ill-health retirement
- rates of withdrawal
- new entrant rates
- rate of mortality before and after retirement
- proportion married
- average age of spouses
- spouses’ mortality
- salary scale (ie promotional increases)
2
Q
Demographic factors (assumptions) needed for a pension scheme model
A
- rates of retirement in good health
- rates of ill-health retirement
- rates of withdrawal
- new entrant rates
- rate of mortality before and after retirement
- proportion married
- average age of spouses
- spouses’ mortality
- salary scale (ie promotional increases)
3
Q
Economic factors (assumptions) needed for a pension scheme model
A
- expenses - Ex
- pension increases - Pe
- discount rate (for valuing liabilities) - D
- investment returns - I
- earnings inflation- Tion from inflaTion
- price inflation -Tion
ExPeDITion
dividend yield is another economic assumption but not for pensions
4
Q
List 6 factors other than age and gender that directly affect mortality and
A
