...Agreement This study material is copyright and is sold for the exclusive use of the purchaser. You may not hire out, lend, give out, sell, store or transmit electronically or photocopy any part of it. You must take care of your material to ensure that it is not used or copied by anybody else. By opening this pack you agree to these conditions. The Actuarial Education Company © IFE: 2009 Examinations All study material produced by ActEd is copyright and is sold for the exclusive use of the purchaser. The copyright is owned by Institute and Faculty Education Limited, a subsidiary of the Faculty and Institute of Actuaries. You may not hire out, lend, give out, sell, store or transmit electronically or photocopy any part of the study material. You must take care of your study material to ensure that it is not used or copied by anybody else. Legal action will be taken if these terms are infringed. In addition, we may seek to take disciplinary action through the profession or through your employer. These conditions remain in force after you have finished using the course. © IFE: 2009 Examinations The Actuarial Education Company CT1: Study Guide Page 1 2009 Study...
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...of the field of applied mathematics per se. Sometimes, the term "applicable mathematics" is used to distinguish between the traditional applied mathematics that developed alongside physics and the many areas of mathematics that are applicable to real-world problems today. There is no consensus as to what the various branches of applied mathematics are. Such categorizations are made difficult by the way mathematics and science change over time, and also by the way universities organize departments, courses, and degrees. Many mathematicians distinguish between "applied mathematics," which is concerned with mathematical methods, and the "applications of mathematics" within science and engineering. A biologist using a population model and applying known mathematics would not be doingapplied mathematics, but rather using it; however, mathematical biologists have posed problems that have stimulated the growth of pure mathematics. Mathematicians such as Poincaré and Arnold deny the existence of "applied mathematics" and claim that there are only "applications of mathematics." Similarly, non-mathematicians blend applied mathematics and applications of mathematics. The use and development of mathematics to solve industrial problems is also called "industrial mathematics".[2] The success of modern numerical mathematical methods and software has led to the emergence of computational mathematics, computational science, and computational engineering, which use high-performance computing for...
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...Natural Disaster Insurance and The Equity-Efficiency Trade-Off This article written by Pierre Picard investigates the role of private insurance in the prevention and mitigation of natural disasters. it characterizes the equity-efficiency trade-off between policy makers under imperfect information about individual prevention costs Pierre Picard , with one simple model, illustrates how tax cuts on insurance contracts can improve incentives to prevention of natural disasters. ------------------------------------------------- and highlights complementarity between individual incentives through tax cuts and collective incentives through grants to the local jurisdiction. ------------------------------------------------- INTRODUCTION As we know and have heard several times today, the last decades have witnessed the worldwide increasing frequency and intensity of weather-related catastrophes. Windstorms, typhoons, floods, landslides, and heathwaves were more and more frequent and we have experienced an increasing trend in economic losses due to weather disasters, and an even stronger increase in insured losses. According to preliminary estimates from Swiss Re’s sigma team, 2011 was a Year of highest ever economic losses ! In 2011, total economic losses to society (both insured and uninsured) due to disasters reached an estimated USD 350 billion. And insured losses for the global insurance industry reached USD 108 billion in 2011.which is more than double than in 2010. ...
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...Actuarial principles and methods are centred upon an approach to crime control and prevention utilizing a risk prevention paradigm which uses evidence based intervention to control and prevent future risks of offending. Actuarialism was defined by Feeley and Simon (1994) as being a defined approach to crime control and management which dispenses with concerns about the meaning or motives behind offending and replaces these with an emphasis on ‘technologies’ of ‘risk minimization’ and the elimination of potential threats to social order. The Risk Factor Prevention Paradigm (RFPP) uses risk assessment and survey to identify factors in the key domains of a young person’s life that statistically increase the likelihood of offending or decrease its likelihood (Case, 2007. p. 92). Youth justice today is increasingly dominated by risk management however it has been heavily criticized. In this essay an explanation will be given of what the risk factors are, what the RFPP is and how actuarial practices are based on this methodological approach. It concludes that a focus on actuarial principles in the current youth justice system works against the fundamental principles of individualization in the criminal justice system . Society has become increasingly concerned with risk and the management of it. It is defined as being an uncertain prediction of future behaviour with the possibility that the behaviour will be harmful or negative. The National Crime Council’s Document Tackling the...
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...stochastic interest rate environment. Such cash flows include the cash flows on assets such as bonds and mortgage-backed securities as well as those for annuity products, life insurance products with interest-rate-sensitive withdrawals, accrued liabilities for definedbenefit pension funds, and property and casualty liability cash flows. 1. INTRODUCTION The aim of this paper is to discuss recent developments in interest rate term structure modeling and the application of these models to the interest rate risk management and valuation of cash flows that are dependent on future interest rates. Traditional approaches to risk management and valuation are based on the concepts of immunization and matching of cash flows. These ideas were pioneered in the actuarial profession by the British actuary Frank Redington (1952). Interest rates have long been recognized as important to the risk management of insurance liabilities. Recent developments have incorporated a stochastic approach to modeling interest rates. A number of actuaries were early pioneers in this area, including John Pollard (1971), Phelim Boyle (1976, 1978), and Harry Panjer and David Bellhouse (1980, 1981). Only a small number of actuaries have been actively involved in international developments in these areas over more recent times. These have included * Andrew Ang is a doctoral student at the Graduate School of Business,...
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...Commercial Management and Risks Job brief Commercial management is the identification and development of business opportunities and profitable management of a project from inception to completion. A commercial manager has to understand how to make profit and how the profit is reflected in its operations. In a construction site, commercial management deals with outlining the beginning of a project i.e. the negotiations and analyzing of the cost of the whole construction project and the long term profit to be yielded by the project. It is said that every construction is unique, and the unique aspect demands a high level of commercial and technical expertise. As a commercial manager, I will provide a management system that ensures proper documentation. This entails that all the documents of the contract follow a full legal procedure that is the land on which the construction is taking place and is acquired legally. The tender details are all available and the contract details of the contractor and his team are all available and ensure clarity to reduce future conflicts between the client and the contractor as Lowe and Leiringer (2006) argue. System devised Programme The system will also define a well defined target. When referring to target we can consider two cases that is the time the construction will take from inception to completion and the financial target. When dealing with the time target we ensure that the construction program is available to all team members to...
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...Agreement This study material is copyright and is sold for the exclusive use of the purchaser. You may not hire out, lend, give out, sell, store or transmit electronically or photocopy any part of it. You must take care of your material to ensure that it is not used or copied by anybody else. By opening this pack you agree to these conditions. The Actuarial Education Company © IFE: 2011 Examinations All study material produced by ActEd is copyright and is sold for the exclusive use of the purchaser. The copyright is owned by Institute and Faculty Education Limited, a subsidiary of the Faculty and Institute of Actuaries. You may not hire out, lend, give out, sell, store or transmit electronically or photocopy any part of the study material. You must take care of your study material to ensure that it is not used or copied by anybody else. Legal action will be taken if these terms are infringed. In addition, we may seek to take disciplinary action through the profession or through your employer. These conditions remain in force after you have finished using the course. © IFE: 2011 Examinations The Actuarial Education Company CT2: Assignment X1 Solutions Page 1 Assignment X1 Solutions Answers to multiple-choice questions The following table gives a summary of the answers to the multiple-choice questions. The answers are repeated below with explanations. 1 2 3 4 5 B B C B B 6 7 8 9 10 D C B C D...
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...evaluation of the status quo from an economic point of view and an assessment of the market impacts of a potential ban on the use of gender as a differentiating factor of private insurance prices in EU. The question that first arises is: Is the abolishment of the inequalities in insurance premiums and benefits going to have positive consequences for the customers of private European insurance companies? To get the reader closer to the functioning of pricing by private insurance companies, some basic information is going to be provided. Firstly, it is important to know the principles governing insurance provision: 1- Risk-based provision: insurers have to price insurance on the basis of the risk of the insured, including the probability of a claim being made against the policy and the cost of that claim 2- Risk solidarity within...
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...Awesome Abraham de Moivre Abraham de Moivre was born on May 26th 1667 in Vitry France. At a young age he secretly studied mathematics at the many religious schools he attended (he was Protestant). According to one account, de Moivre was put in prison for two years before leaving for London, where he would spend the rest of his life. By pure luck he ended up being at the house of the Earl of Devonshire working as a math tutor, when Isaac Newton all the sudden walked in with a copy of the Principia, which is his famous work on the theory of gravitation. De Moivre took the book and studied it by himself, but discovered that it a lot more challenging than he had expected. However, by persevering study he not only mastered the work but became an expert on it. He became such an expert that Newton would tell people that asked him questions to “Go to Mr. De Moivre; he knows these things better than I do.” In 1692 he met Edmond Halley, who was so enthralled by his mathematical skills he helped get his first paper, on Newton’s “method of fluxions” (differential calculus) to be published. Through Halley, de Moivre also became a member of Newton’s circle of friends and elected to the Royal Society in 1712. Despite these successes, de Moivre was unable to secure himself a university position—his French origin was one reason. He made a measly living as a tutor of mathematics, and for the rest of his life would lament having to waste his time walking between the homes of his students. His...
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...Executive Summary This report provides an analysis on how ethical conflicts arise in the actuarial profession. Through extensive research we uncover many conflicts of interest and ethical dilemmas that actuaries can face during their everyday work and careers. In particular we look at how genetic factors and rating criterion create conflict. We look at ethical conflict with respect to testimony, pension and reserve actuaries, and also how external watchdogs play a role in auditing actuaries’ decisions. We found that actuaries must always be alert and prepared to deal with these ethical conflicts. They must be aware that their actions can have an impact on the financial future of a company, the insurance rates of an individual, or otherwise could result in a problem for themselves. They must also be aware that there are external watchdogs in place to make sure they are not forging numbers but are instead making informed and accurate decisions. We recommend that students who intend to pursue actuarial studies take a course called Introduction to Actuarial Practice (MTHEL 131). We also recommend that the faculty should modify this course to put more weight on professionalism and ethics to emphasise the importance of the subject. This will educate students so they can make informed and ethically sound decisions in their future careers. Table of Contents 1.0 Introduction…………………………………………………………………………....…....…1 2.0 Methods…………………………………………………………………......…………....……3 3...
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...C2922 Economics Utility Functions T.C. Johnson October 30, 2007 1 Introduction “Utility” refers to the perceived value of a good and utility theory spans mathematics, economics and psychology. For example, if you prefer vanilla ice-cream to chocolate, you would assign greater utility to vanilla ice-cream than to the same quantity of chocolate ice-cream. The fact that different agents have different utilities for goods is the basis of all markets. In the context of actuarial science, the focus is on the utility of money, the study of the utility of money started in the early 1700’s with the St Petersburg Paradox. 1.0.1 The St Petersburg Paradox A player pays some fee to a casino in order to play a game where a fair coin will be tossed repeatedly until a ”tail” first appears, ending the game. The payoff of the game is 2N −1 where N is the number of times until the first tail appears. How much should the casino charge to play this game, how much should a player expect to play the game? This game was played in 18th century St Petersburg and numerous mathematicians, including Bernoulli were interested in it, since the expected payoff of the game is infinite ∞ E[X] = k=1 2 k−1 1 = 2k ∞ k=1 1 2 1 Utility functions In 1728, a Swiss mathematician, Gabriel Cramer, observed that “the mathematicians estimate money in proportion to its quantity, and men of good sense in proportion to the usage that they may make of it”. 2 Modern psychology explains utility...
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...Running a business can be a dangerous occupation with many different types of risk. Some of these potential hazards can destroy a business, while others can cause serious damage that can be costly and time consuming to repair. Despite the risks implicit in doing business, CEOs and/or risk management officers – no matter the size of the business, from small to corporate giant - can prepare for them if they know what they are. If and when risk becomes reality, a well-prepared business can moderate the risk's impact. Dollar losses, lost time and productivity and the negative impact on customers can all be minimized. Physical Risks Building risks are the most common type of physical risk. Fire or explosions are the most common risk to a building. To manage this risk, and the risk to employees, it's important to do the following: * Make sure all employees know the exact street address of the building to give the 911 operator in case of emergency. * Know the location of all exits. * Install fire alarms and smoke detectors. * A sprinkler system will provide additional protection to the physical plant, equipment, documents and, of course, personnel. * Inform all employees that in the event of emergency their personal safety takes priority over everything else. Tell them to leave the building and abandon all work-associated documents, equipment and or products. Hazardous material spills or accidents also occur with some regularity. Among the hazardous materials...
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...when the employer makes payment to a funding agency. The agency accumulates the assets of the pension fund and makes payment to the recipient as the benefits come due. Some pension plans are contributory, in which the employees bear part of the cost of the stated benefits or voluntarily make payments to increase their benefits. Other plans are non-contributory, in which the employer bears the entire cost. Plans that offer tax benefits are often called qualified pension plans. They permit deductibility of the employer’s contribution to the pension fund and tax-free status of earnings from pension fund assets. The pension fund should be a separate legal and accounting entity. This chapter explains the pension accounting and reporting problems of the employer as the sponsor of the plan. The two most common types of pension plans are: * Defined contribution plans * Defined benefit plans Defined Contribution Plan … The employer agrees to contribute to a pension trust a certain sum each period, based on a formula. The plan defines only the employer’s contribution. A company usually turns over to an independent third-party trustee the amounts originally contributed. The trustee (acting...
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...For Immediate Release India Insurance Industry Essay Writing Competition Winner Announced Ms Megha Asnani, Business Analyst with Accenture Service Private Limited was declared winner of the 2nd India Insurance Industry Essay Writing Competition organised by Asia Insurance Review in conjunction with the India Rendezvous. Ms Asnani’s essay on the topic: ‘An Indian Solvency II?’ stood out for its originality and in-depth analysis of the subject. Ms. Asnani will receive a cash prize of S$5,000 and she will also make a presentation of the winning essay at the 5th India Rendezvous in Mumbai on 20th January 2012. The “Energise Insurance in India” essay competition drew entries from some of the best insurance writers in India and was judged by a distinguished panel of top industry professionals and chaired by Mr Yogesh Lohiya, Chairman and Managing Director of GIC Re. Others in the judging panel included: Mr Jan Mumenthaler, Head-Insurance Services Group, Business Risk Department, IFC; Ms Joan Fitzpatrick, CEO, ANZIIF; Mr Michael J Morrissey, President & CEO, IIS; Mr Dezider Stefunko, Chief, Insurance Unit, UNCTAD; Mr Jawaharlal Upamaka, Editor, IRDA Journal; Mr A K Roy, General Manager, GIC Re; Mr K Raghunath, Vice President, Reinsurance, Bharti AXA General Insurance Co; and Mr G V Rao, Chairman & CEO, GVR Risk Management Associates. More details at www.asiainsurancereview.com For enquiries, please contact: Asia Insurance Review Ms Ann Tay, DID +65 6224 5583 or email: ann@asiainsurancereview...
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...sometimes, we may confuse it with things like racism or sexism. Classism, in my opinion, plays a larger role in the criminal justice system as opposed to the other forms of discriminatory practices. In particular, class largely comes into play during the sentencing process. Many authors argue that factors outside of class play a more important role, but I believe that there needs to be more attention paid to the role that class plays in targeting and the sentencing process in the criminal justice system. In order to understand the role that class plays in the sentencing process, we must, first, look at the role that it plays before the criminal reaches the day of sentencing. There are a plethora of publications that speak on profiling and actuarial methods which get people into the system. Though these are two large proponents of the discriminatory acts that exist within the confines of the criminal justice system, it does not begin with these institutionalized methods. The first instance of discrimination, which leads to all of the other forms within the system, are the laws and crime control policies that are implemented that, in some instances, are set up...
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