Revision books

Question 1

Issues surrounding capital requirements on each product?

Answer 1

Frequency of payments
Initial expenses
Solvency capital
Contract design
Reserving bases

Question 2

Macro (big) sources of risk for insurer

Answer 2

Rates of mort
Investment
Senior management actions
Competition
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

Question 3

What risks are there to do with NB for Insurer?

Answer 3

Mix and
Volume by
A
Nature
Source
Size

Question 4

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

Answer 4

Asset share

Question 5

The 3 types of profit distribution in WP

Answer 5

Additions to benefits
Revalorisation
Contribution dividends

Question 6

4 main distribution channels

Answer 6

Direct sales
Intermediary IFA
Tied agent
Advertising (direct marketing)

Question 7

What are the two types of tax on insurer

Answer 7

On annual profits

On investment income - operating expenses

Question 8

What influences can different distribution channels have?

Answer 8

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

Question 9

What topics are in develop solutions and monitor experience?

Answer 9

Design of product
Setting assumptions
Monitor experience

Question 10

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

Answer 10

financing
Onerous ness of guarantees
Risk characteristics
Competition
Extent of X subsidies
Sensitivity of profit

Consistency with other products
Regulation
Admin systems
Marketability
Profitability

Question 11

Pricing assumptions

Answer 11

Reserving basis
Investment
Mort

Profit
Inflation
New business
Tax

Commission
Rdr
Expenses
Withdrawals

Question 12

Why calculate EV

Answer 12

Gives the value for the shareholders of the existing business

Question 13

The EV calculation is made up of which 2 main parts

Answer 13

NAV + VIF

NAV = A-L

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

Question 14

Why monitor experience?

Answer 14

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

Management info
Identify trends and take action

Question 15

Give 4 types of experience investigation

Answer 15

Withdrawal
Expense
Investment return
Mortality

Question 16

Uses for models?

Answer 16

Pricing
Design
Actuarial funding

Return on capital
EV
Profitability of EB
Solvency projections

Guarantee costs
Option costs
Valuing existing business
Alteration costs
Surrender values

Question 17

Alteration methods

Answer 17

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

Question 18

2 formula based mortality option methods

Answer 18

Conventional

North American

Question 19

4 categories of policy data checks

Answer 19

Movement recon
AOS AO EV profit
Reasonableness
Consistency
Unusual values
Spot checks

Question 20

Which products are in ST2?

Answer 20

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