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ST2 > Revision book mnemonics > Flashcards

Revision book mnemonics Flashcards

0
Q

Issues surrounding capital requirements on each product?

A

Five Issues Surrounding CR

Frequency of payments
Initial expenses
Solvency capital
Contract design
Reserving bases
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1
Q

Which products are in ST2?

A

WEL RIDD of GI

WoL
EA
L.Term
Ren/Conv Term
Imm annuity
Deferred Annuity
D.Term
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2
Q

Macro (big) sources of risk for insurer

A

RISK LIFE DROWN CATS

Rates of mort
Investment
Senior management actions
Kompetition
Distributors actions

Legal and regulatory developments
Inflation
Fraud
Expenses

Data - policy and other
Reinsurers and other counterparties
Options and guarantees
Withdrawals
New business vol/mix/source/size/nature

Controls failure
Aggregation of risk
Tax
Selection

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3
Q

What risks are there to do with NB for Insurer?

A

MVANSS

Mix and
Volume by
A
Nature
Source
Size
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4
Q

What will capital requirements for each individual product ultimately depend on?

A

Specific design if that product

Supervisory reserving requirement in force

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5
Q

What is a key tool to help manage risk in WP business?

A

Asset share

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6
Q

The 3 types of profit distribution in WP

A

Additions to benefits
Revalorisation
Contribution dividends

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7
Q

Give 4 examples of general business environment

A

Distribution channels
Supervisory regime
Fiscal regime
Professional guidance to actuaries

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8
Q

What does the general business environment influence?

A

Life insurers
Products they sell
Work of actuaries

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9
Q

4 main distribution channels

A 
DITA
Direct sales
Intermediary IFA
Tied agent
Advertising (direct marketing)
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10
Q

What are the two types of tax on insurer

A

On annual profits

On investment income - operating expenses

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11
Q

What influences can different distribution channels have?

A

Different demographics
Different product design
Different underwriting level
Different pricing due to competitiveness

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12
Q

On bonuses, reserving and general business environment what is the most important thing to know?

A

BOOKWORK!

Book 2

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13
Q

What topics are in develop solutions and monitor experience?

A

Design of product
Setting assumptions - 2 chapter
Monitor experience

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14
Q

Factors a company will take into account when making choices for the design of a product?

A 
FORCES CRAMP
financing
Onerous ness of guarantees
Risk characteristics
Competition
Extent of X subsidies
Sensitivity of profit
Consistency with other products
Regulation
Admin systems
Marketability
Profitability
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15
Q

Pricing assumptions

A

RIM PINT CREW

Reserving basis
Investment
Mort

Profit
Inflation
New business
Tax

Commission
Rdr
Expenses
Withdrawals

16
Q

What choices will a company make when designing a product?

A

Type of product
Guarantees (or not) and their level
Charge types and level
Surrender value method and basis

17
Q

What are the 2 most important things to take into account when choosing assumptions?

A

Sensitivity (financial significance)

Consistency between assumptions

18
Q

Why calculate EV

A

Gives the value for the shareholders of the existing business

19
Q

The EV calculation is made up of which 2 main parts

A

Assets in excess of reserves currently

Future releases of margins in the reserves (the shareholder value of these, so use COC)

20
Q

Why monitor experience?

A

FURMI

Feedback into ACC (following 2 points)
Update assumptions
Revise models

Management info
Identify trends and take action

21
Q

Give 4 types of experience investigation

A 
WEIM
Withdrawal
Expense
Investment return
Mortality
22
Q

Uses for models?

A

PDA REPS GOVAS

Pricing
Design
Actuarial funding

Return on capital
EV
Profitability of EB
Solvency projections

Guarantee costs
Option costs
Valuing existing business
Alteration costs
Surrender values
23
Q

Alteration methods

A 
Equate policy values
Proportionate paid up method
Surrender value respread
Pup value plus premium for balance of benefits
Accumulation of premium arrears/surplus
24
Q

2 formula based mortality option methods

A

Conventional

North American

25
Q

4 categories of policy data checks

A

MARCUS

Movement recon
AOS AO EVprofit
Reasonableness
Consistency
Unusual values
Spot checks

ST2 (3 decks)

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