Actuarial Outpost
 
Go Back   Actuarial Outpost > Exams - Please Limit Discussion to Exam-Related Topics > SoA > Group and Health Track > Group & Health Advanced Exam
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions


Upload your resume securely at https://www.dwsimpson.com
to be contacted when our jobs meet your skills and objectives.


Group & Health Advanced Exam Old Group and Health Company/Sponsor Perspective Forum

Reply
 
Thread Tools Search this Thread Display Modes
  #1  
Old 03-15-2020, 06:07 PM
fightinphilz fightinphilz is offline
Member
SOA
 
Join Date: Mar 2013
Posts: 44
Default Fall 2019 FV-A #1 (c)

I understand all the steps here in the SOA solution except for how they are calculating expected in-force contribution. Can someone explain how they are going from the formulas presented in the reading, to the formula they are listing there in the sample solution? namely, they say that

EC of IF business = [IBV (t-1) + RC (t-1)] x RDR

From the reading, the formula for line 5 of the AoM Report should be:
EC of IF business = IF EIBV (t) - IBV (t-1) = IBV(t-1) x RDR - IF BP(t) + CoC (t)

how do you get from the 2nd formula back to the first?
Reply With Quote
  #2  
Old 03-25-2020, 10:04 AM
Alemana19 Alemana19 is offline
Member
SOA
 
Join Date: Sep 2019
Posts: 98
Default

Quote:
Originally Posted by fightinphilz View Post
I understand all the steps here in the SOA solution except for how they are calculating expected in-force contribution. Can someone explain how they are going from the formulas presented in the reading, to the formula they are listing there in the sample solution? namely, they say that

EC of IF business = [IBV (t-1) + RC (t-1)] x RDR

From the reading, the formula for line 5 of the AoM Report should be:
EC of IF business = IF EIBV (t) - IBV (t-1) = IBV(t-1) x RDR - IF BP(t) + CoC (t)

how do you get from the 2nd formula back to the first?
I'll try to help when I get to doing problems for this objective. In the meantime, could you add in page numbers (formula in the reading) if you can? Or sections? I have both mate and the source materials so either/both work.
Reply With Quote
  #3  
Old 03-27-2020, 02:05 AM
MATEseminars.dc MATEseminars.dc is offline
Member
SOA
 
Join Date: Aug 2018
College: Northern Arizona University
Posts: 56
Default EC help

Quote:
Originally Posted by fightinphilz View Post
I understand all the steps here in the SOA solution except for how they are calculating expected in-force contribution. Can someone explain how they are going from the formulas presented in the reading, to the formula they are listing there in the sample solution? namely, they say that

EC of IF business = [IBV (t-1) + RC (t-1)] x RDR

From the reading, the formula for line 5 of the AoM Report should be:
EC of IF business = IF EIBV (t) - IBV (t-1) = IBV(t-1) x RDR - IF BP(t) + CoC (t)

how do you get from the 2nd formula back to the first?
Hello,

Your second formula is set up right but it is not equal to "EC of IF business" as you have stated. It is equal to "the in-force business expected increase in IBV"

So it should be (see page 22 of source formula #18):
the in-force business expected increase in IBV = IF EIBV (t) - IBV (t-1) = IBV(t-1) x RDR - IF BP(t) + CoC (t)

Then to get from there to the EC of IF business ....

EC of IF business = expected increase in IBV plus expected net income (page 22 of the source material)

Using your formula: expected increase in IBV = IBV(t-1) x RDR - IF BP(t) + CoC (t)

expected net income = IF BP(t) + i(t) * RC(t-1)

Then used CoC(t) = [RDR - i(t)] * RC(t-1)

Then put it all together

EC of IF business =
IBV(t-1) x RDR - IF BP(t) + [RDR - i(t)] * RC(t-1)
+
IF BP(t) + i(t) * RC(t-1)

(the book profits and the i*RC terms fall out and you are left with your answer)

= IBV(t-1) x RDR + RDR * RC(t-1)
- IF BP(t) + IF BP(t)
- i(t) * RC(t-1) + i(t) * RC(t-1)
=[IBV(t-1) + RC(t-1)] * RDR

I hope that helps you.

-Dustin
__________________
__________________
Dustin Conrad
website: www.mateseminars.com
e-mail: mateseminars.dc@gmail.com
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 08:30 PM.


Powered by vBulletin®
Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.21594 seconds with 9 queries