EOM4 task2

[wangwwzj]

hey, guys, in task 2, we're asked to answer what do we see as the key risks in this product that need to be better managed.

in my analysis,

i find that adjustment factor of mortality has a big affect on the profit.
if i change the factor from 70% to 80% ,I even get a negtive profit.

i also test the risk of interest rate and lapse rate, commission bonus.

in my opinion, adjustment factor is the key risk. anybody have suggestion on my conclusion?

thanks!

[wangwwzj]

ummmmm, no body answered me, i have to do it in my way.

[BK1984]

My suggestion is that you're approaching the problem the wrong way. In task 1, you already have analyzed emerging product experience and how it aligns with original assumptions.

Look at the mortality experience between separate bands with different underwriting requirements. Would it make sense for mortality to jump that much given the experience?

Task 2 is not a question of modeling or sensitivity analysis. You've compiled the data in task 1 that you need in order to make some initial business decisions. Task 2 is asking you to analyze that data. I'm not going to give the answer, but emerging experience is deviating quite a bit from one of the key model assumptions, and mortality is not it.

[wangwwzj]

well, thank you for your answer, i think i was on the wrong way. i've got the idea now. thx!

[jy006m]

Originally Posted by BK1984

I'm not going to give the answer, but emerging experience is deviating quite a bit from one of the key model assumptions, and mortality is not it.

It's lapse rate, right? Mortality and investment look fine if I filled out those 2 tabs correctly.