Ch 35: Monitoring experience

Question 1

Reasons for monitoring experience

Answer 1

o Trends: identity negative trends and take corrective action
o Information: provide management information
o Assumption: update assumptions to be inline with expected future experience
o Asset share: to develop the earned asset share

Question 2

Reasons for performing an AoS or AoEV

Answer 2

DIVERGENCER

o Deviation of A vs E and determine assumptions with great financial impact (AoS)
o Information (AoS and AoEV)
- Provide information to management on trends in company’s experience
-Provide information for accounts
o Variance - not relevant for F102
o Executive remuneration schemes: provide data for use in these schemes (AoEV)
o Reconcile successive values (AoEV)
o Group non-recurring components of surplus and decide on distribution of surplus to WP pH (AoS)
o Experience feedback: identify trends in experience that can feedback into the actuarial control cycle - not relevant for F102
o New business: show the financial effect of new business (AoS)
o Checks: to provide a check on the valuation data and process, if carried out independently (AoS)
o Extra check: validate calculations, assumptions, data (AoEV)
o Regulation: comply with regulation requirements (AoS)