Chapter 34 Flashcards
(6 cards)
What are the main aims of actuarial valuation for benefit schemes?
- Demonstrate solvency of scheme
- Determine future contribution rate required
What should be disclosed to beneficiaries of benefit schemes?
RETIRE
* R – Risks involved
* E – Expense charges
* T – Treatment of entitlements in event of insolvency
* I – Investment strategy
* R – Rights to benefits (entitlements)
* E – Employer/employee contribution obligations
When should disclosure to policyholders/beneficiaries occur?
INFORM
* I – On entry (Initial disclosure)
* N – Notice at regular intervals
* F – Following commencement of payments
* O – On request
* R – Required by legislation
* M – Multiple/combined disclosures where applicable
What should be disclosed to sponsors of benefit schemes?
ACCURATE
A – Assumptions used
C – Consistency in accounting treatment
C – Cost of benefits accrued (realistic costs, incl. directors)
U – Unfunded liabilities (past service liability increases)
R – Returns on investments (investment return achieved)
A – Actuarial method used
T – Total liabilities and changes (surplus/deficit changes)
E – Entry and exit of members (membership movements)
What reports can accompany results
PRIOR
P – Performance against key objectives
R – Risk: attitude, key risks, and mitigation strategies
I – Investment strategy and performance
O – Objectives: progress against short- and long-term goals
R – Reporting on Governance: structures and independence assurance
What figures should be used when reporting results of insurance companies and banks
Insurance companies:
* Incurred expenses : premium income
* Commission : premium income
* Incurred claims + expenses : premium income = Operating ratio
(gross and net reinsurance, incl.loss ratio)
Banks:
* P(default)
* Loss given default
These are on a loan-by-loan basis
