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  #41  
Old 04-10-2004, 02:10 AM
jazzman jazzman is offline
 
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With regard to the LHATF call, are non-regulators allowed to listen and participate in the discussion? If we have points that we want to bring before the regulator, who should we contact? Must I be a member of American Academy to participate?
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  #42  
Old 04-12-2004, 02:53 PM
fsa fsa is offline
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At the actual LHATF meetings during the quarterly NAIC meetings, the regulators usually give non-regulators a chance to comment (and Academy membership is not required).

However, during a conference call, since the time is so short, usually just the regulators are allowed to talk. Of course, if the Academy had been asked to prepare a report, the Academy chair is allowed to report and answer questions.

If you have a comment on an NAIC draft or issue, you can mail or e-mail your comments in. (Note, in general, whatever you send will become public). For LHATF in general, send it to the Chair - Ms. Leslie Jones of South Carolina and cc Mark Peavy at the NAIC. Also, if there is one LHATF member who is taking the lead in the issue, you may want to send it to him/her. For the Health side, send it to the Chair of the LHATF's A&H Working Group - Julia Philips of Minnesota with a cc to Dennis Hare of the NAIC.
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  #43  
Old 04-21-2004, 10:44 AM
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elleminopee elleminopee is offline
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I wonder if some of the concepts used in AG 37 (Variable GMDB reserving) would have worked better than the method they came up with for UL secondary guarantees in AXXX.

Consider this sentence from AG 37: "If the GMDB would continue in effect subsequent to the valuation date with no additional actions required, contingent requirements are assumed not to resume until the latest point in time which would prevent the termination of the GMDB."

Instead of this factor that makes you interpolate between a valuation NSP and XXX reserves, why not stick to the PVFB less PVFP concept where PVFP are the contingent premiums defined above. In this case if someone is fully paid up, there are no future premiums to subtract since we assume premiums "do not resume unitl the latest point in time which would prevent the termination of the" guarantee.

I haven't spent a lot of time thinking about it, so maybe there's a loophole here too, but it seems like it would work better than what they have now.
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  #44  
Old 04-21-2004, 10:48 AM
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elleminopee elleminopee is offline
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Traci, just curious if you had given up on trying to get a link to the RF on the SOA site. Since they actually used material from here in a LHATF meeting, we should be recognized as a somewhat more official actuarial resource. It's ironic that out input is good enough to be used in a meeting, but not good enough to get a link.

And we should all congratulate ourselves for having a topic that generated the most replies so far in the life section. Most die out before 10.
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"A new tree had grown from the stump and its trunk had grown along the ground until it reached a place where there were no wash lines above it. Then it had started to grow towards the sky again. Annie, the fir tree, that the Nolans had cherished with waterings and manurings, had long since sickened and died. But this tree in the yard--this tree that men chopped down...this tree that they built a bonfire around, trying to burn up its stump--this tree had lived!" - Betty Smith, A Tree Grows in Brooklyn
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  #45  
Old 04-21-2004, 06:04 PM
friendlyFSA friendlyFSA is offline
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Default Expected PVFB less PVFP

I submit for discussion that the appropriate economic balance sheet value of the liability is not determined based on what is required by any regulation, AG, SOP. Rather, it is be determined from the application of financial economics to the prospective known and/or projected cash flows (i.e. expected PVFB – PVFP). This is not to any way imply that you don’t need to know what is required and to follow and comply with the regulations, Ags or SOPs, but to not let them be the only guidance or constraints that are considered.)

One of the simplest scenarios to analyze is a UL secondary guarantee policy funded with a single premium (alluded to above). Since there are no future premiums, one must simply calculate the expected PVFB. Recent industry publications show that the current single premiums to provide a lifetime NLG for a $1MM death benefit for a 75 year-old Male, Best Non-tobacco class are anywhere from less than 400K to over 800K.

Using an available pricing mortality assumption (not an industry standard), assuming zero lapses, I developed an expected death benefit cash flow pattern, ignored all expenses, and calculated the IRR on the cash flows assuming a 400K single premium. The resulting IRR was 5.88%. (Note: For simplicity, I assumed that the contract paid the face amount to surviving policyholders at age 100.)

Hypothetically, this mortality is my best estimate, and I need to earn 5.88% on the invested cash flows, just to pay the claims, ignoring all expenses and profit. Further, this represents and after-tax return to purchasers.

For reference, today’s 20 year AAA Corporate Bond Rate on bonds.yahoo.com is 5.60%, 20 yr A Corp Bonds are 6.09%, both pre-tax. From a purchasers standpoint, it would seem that the “Single Premium” NLG life insurance (which could also be described as a “zero coupon bond” maturing at death in terms of its cash flow characteristics) presents a very attractive opportunity. Further, these yields provide vary little or no spread opportunity for those manufacturing the “single premium NLG products priced at the lower”.

Would seem to me that the correct economic balance sheet position for this contract would be a net liability at least close to or equal to the single premium, if not higher!!
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  #46  
Old 04-22-2004, 09:30 AM
friendlyFSA friendlyFSA is offline
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One note on my last post....with respect to the regs, AGs and SOPs. Ultimately, these constructs will provide a sound framework to properly evaluate the risk, but due to the nature of the development and approval process(es) they tend to lag product innovations demanded by market forces. Thus the need to extend beyond what is currently "required" in this context, and evaluate the true economic value.
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  #47  
Old 04-22-2004, 07:20 PM
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Quote:
Traci, just curious if you had given up on trying to get a link to the RF on the SOA site.
We're still working on it.

Chris Desrochers has been very helpful on that front in getting our case heard. And many of the candidates for Pres and VP's are supportive.

Check out the discussions in the Candidates section - and VOTE for them!
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  #48  
Old 04-23-2004, 12:20 PM
mayreeh mayreeh is offline
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Default Re: professionalism

Quote:
Originally Posted by JMO Fan
Reserves can't compensate for mismanagement :o , either. And for all its virtues (squelch that smirk ), regulation can't remove reserve-reducing rascals . Assiduous appointed actuaries are truly the best insolvency preventive -- but they're no universal cure.
Assiduous appointed actuaries..... Alliteration? Someone with time on their hands could work with that.....

Assiduous appointed actuaries are always annoying ....?

:o Sorry.... I didn't get enough sleep last night or enough coffee this morning.... I think I am slipping into some sort of dream state or something....
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  #49  
Old 05-05-2004, 12:05 AM
jazzman jazzman is offline
 
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Does anyone know if the LHATF call is still scheduled for May 17?? I have not heard anything recently, I wonder if people have lost interest.
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  #50  
Old 05-05-2004, 09:45 AM
Makeham Makeham is offline
 
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It is still on the NAIC calendar. I have registered, but I have not yet received a confirmation.
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