Actuarial Outpost Broverman Weekly Questions - Jan 30
 Register Blogs Wiki FAQ Calendar Search Today's Posts Mark Forums Read
 FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

 Life Actuarial Jobs& Annuities,& Investments Worldwide Salary SurveysLife & HealthPension Property & Casualty DW Simpson & Co.Actuarial Recruitment Worldwide Casualty Jobs& Property -- WorldwideReinsurance,Insurance, Bureaus & Consulting

#1
05-09-2006, 02:52 PM
 Frenchie Member SOA Join Date: May 2003 Location: Mississippi Studying for Exam C College: Georgia State University - Alumni Favorite beer: Stella!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Posts: 8,584
Broverman Weekly Questions - Jan 30

Question

The insurance is a 2-year endowment. I follow the standard formula for calculating the Asset Share using recursion. My question is this: I see that the Asset Share at the end of year two is equal to the endowment benefit (\$1,000). Is this always true for endowments? My thought is that it is since it's the end of the contract and therefore, those still around get to cash out, therefore Asset Share should equal Endowment benefit. I hope that's right b/c that's what makes sense to me.
__________________
"Never underestimate the strength of a woman. Never f@#k with one who runs 26.2 miles for fun."
#2
05-09-2006, 02:56 PM
 Gandalf Site Supporter Site Supporter SOA Join Date: Nov 2001 Location: Middle Earth Posts: 26,472

In real life, you would want the ending asset share for an endowment insurance to exceed the endowment benefit. Otherwise, after you pay the benefit, the company has made 0 profit.
#3
05-09-2006, 03:05 PM
 Frenchie Member SOA Join Date: May 2003 Location: Mississippi Studying for Exam C College: Georgia State University - Alumni Favorite beer: Stella!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Posts: 8,584

Quote:
 Originally Posted by Gandalf In real life, you would want the ending asset share for an endowment insurance to exceed the endowment benefit. Otherwise, after you pay the benefit, the company has made 0 profit.

But with the way the recursions are set up, the asset share goes to the survivors each year, not the company, right? (why shouldn't the SOA suspend reality every now and then ) In that case, if we ignore the need for profit, is my previous analysis correct?
__________________
"Never underestimate the strength of a woman. Never f@#k with one who runs 26.2 miles for fun."
#4
05-09-2006, 03:09 PM
 Gandalf Site Supporter Site Supporter SOA Join Date: Nov 2001 Location: Middle Earth Posts: 26,472

Quote:
 Originally Posted by Frenchie But with the way the recursions are set up, the asset share goes to the survivors each year, not the company, right? (why shouldn't the SOA suspend reality every now and then ) In that case, if we ignore the need for profit, is my previous analysis correct?
I would have to dig out my old Actuarial Mathematics text to be sure (and I'm not going to), but I would be really surprised if it suggested the asset share goes to the survivors. It is calculated on a "per survivor" basis, but that's not the same as saying they get it.

The SOA suspends reality like profits quite often, but I don't think you could count on them suspending reality.

 Thread Tools Display Modes Linear Mode

 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 09:39 PM.

 -- Default Style - Fluid Width ---- Default Style - Fixed Width ---- Old Default Style ---- Easy on the eyes ---- Smooth Darkness ---- Chestnut ---- Apple-ish Style ---- If Apples were blue ---- If Apples were green ---- If Apples were purple ---- Halloween 2007 ---- B&W ---- Halloween ---- AO Christmas Theme ---- Turkey Day Theme ---- AO 2007 beta ---- 4th Of July Contact Us - Actuarial Outpost - Archive - Privacy Statement - Top