M3631Weeks2to4-S2011

M3631Weeks2to4-S2011 - Contingent Contract Reserves EA...

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Unformatted text preview: Contingent Contract Reserves EA Valdez Chapter summary insurance reserves why hold reserves? Prospective loss whole life retrospective formula endowment insurance other types Fully continuous whole life retrospective formula other types A general form of life insurance prospective loss and reserves recursive calculations net amount at risk terminal vs initial reserves Illustrative examples page 1 Contingent Contract Reserves Math 3631 Actuarial Mathematics II Spring 2011 semester EA Valdez University of Connecticut - Storrs Lecture: Weeks 2-4 Contingent Contract Reserves EA Valdez Chapter summary insurance reserves why hold reserves? Prospective loss whole life retrospective formula endowment insurance other types Fully continuous whole life retrospective formula other types A general form of life insurance prospective loss and reserves recursive calculations net amount at risk terminal vs initial reserves Illustrative examples page 2 Chapter summary Insurance reserves what are they? how do we calculate them? why are they important? Net premium reserves (or benefit reserves) prospective calculation of reserves retrospective calculation of reserves equivalence between prospective and retrospective Chapters 8 (Cunningham, et al.) Contingent Contract Reserves EA Valdez Chapter summary insurance reserves why hold reserves? Prospective loss whole life retrospective formula endowment insurance other types Fully continuous whole life retrospective formula other types A general form of life insurance prospective loss and reserves recursive calculations net amount at risk terminal vs initial reserves Illustrative examples page 3 Insurance reserves Money set aside to be able to cover insurers future financial obligations as promised through the insurance contract. reserves show up as a liability item in the balance sheet; increases in reserves are an expense item in the income statement. Reserve calculations may vary because of: purpose of reserve valuation: statutory (solvency), GAAP (realistic, shareholders/investors), mergers/acquisitions assumptions and basis (mortality, interest) - may be prescribed Actuary is responsible for preparing an Actuarial Opinion and Memorandum: that the companys assets are sufficient to back reserves. Reserves are more often called provisions in Europe. another term used is policy values Contingent Contract Reserves EA Valdez Chapter summary insurance reserves why hold reserves? Prospective loss whole life retrospective formula endowment insurance other types Fully continuous whole life retrospective formula other types A general form of life insurance prospective loss and reserves recursive calculations net amount at risk terminal vs initial reserves Illustrative examples page 4 Why hold reserves?...
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M3631Weeks2to4-S2011 - Contingent Contract Reserves EA...

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