...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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...FINA 3220 Actuarial Model I Group Project Report ACTUARIAL ELITE PLAN LI Yuxuan (Steven) TO Chun Yuen (Jerry) ZHANG Xinyi (Cindy) ZHANG Xuanshen (Zachary) ZHANG Yanan (Victoria) ZHAO Shulun (Ellen) CONTENTS .Executive Summary Product Design and Features ………………………………………………………… 1 1.1. Customer Analysis ………………………………………………………………… 1 1.2. Coverage …………………………………………………………………………… 1 1.3. Premium …………………………………………………………………………… 1 1.4. Benefits …………………………………………………………………………… 2 1.4.1. Annuity ……………………………………………………………………… 2 1.4.2. Death Benefit ………………………………………………………………… 2 1.4.3. Optional Supplementary Benefits …………………………………………… 2 1.5. Special case (of Prof. Ma) ………………………………………………………… 3 Assumptions …………………………………………………………………………… 3 2.1. Mortality Rate ……………………………………………………………………… 3 2.2. Interest Rate ……………………………………………………………………… 4 2.3. Investment Rate …………………………………………………………………… 4 2.4. Operational Cost …………………………………………………………………… 5 Methodology …………………………………………………………………………… 5 3.1. Basic Premium Pricing: Equivalence...
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...Clinical judgment is when one believes on whatever relevant data or what we believe is the best choice, while actuarial judgment solely uses practical proven statistical associations between data and outcome; in other words, one selects what statistics or numbers recommend (Dawes, Faust, & Meehl, 1989). I believe that both ways are not better than each other because for the most part, people tend to use their best judgments based on the situation at hand and an actuarial judgment may not offer the best choice. One of my clinical judgments was choosing a pest control company to fumigate my home bi-weekly. They showed up at my front door explaining the process and how they can eliminate all types of insects and other pests from my home. I was motivated to give them a try as I had recently moved into the house and did not have anyone doing this service during that time. They also offered to fumigate immediately and bill me monthly (did not have to pay that day). I thought this was a pretty good deal. After a week or so after the fumigation, I noticed I was getting spider webs by my front door. I called the service so they could come back out and take care of the situation. They came over and explained that it will take a few tries to kill these spiders. I was a bit upset as I did not have them prior to the fumigation. They explained that the venom drew them out and at least I can see them now. At that point I just asked them to fumigate around the area...
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...21/03/13 CNBS - Circular CNBS No.003/2004 13 de enero de 2004 SISTEMA ASEGURADOR Toda la República CIRCULAR CNBS No.003/2004 Señores: Nos permitimos transcribir a ustedes, la Resolución aprobada por la Comisión Nacional de Bancos y Seguros, que literalmente dice: “RESOLUCIÓN No.041/13-01-2004.- La Comisión Nacional de Bancos y Seguros, CONSIDERANDO: Que en el proceso de modernización del Estado y para estar acorde con los procesos económicos modernos, el Congreso Nacional de la República emitió la Ley de Instituciones de Seguros y Reaseguros mediante Decreto 22-2001 del 2 de abril de 2001, que entró en vigencia a partir del 1 de septiembre del mismo año. Que la Comisión Nacional de Bancos y Seguros, en su calidad de órgano supervisor de las Instituciones de Seguros que actualmente operan o que operen en el futuro, y las de Reaseguro que pudieren autorizarse, debe velar por que las Instituciones de Seguros deberán constituir y mantener las reservas y provisiones técnicas necesarias para responder por el cumplimiento de las obligaciones derivadas de los contratos de seguros, fianzas o reaseguro. CONSIDERANDO: CONSIDERANDO: Que uno de los componentes de la Ley de Instituciones de Seguros y Reaseguros es la constitución de reservas técnicas. CONSIDERANDO: CONSIDERANDO: Que el Artículo 60 de la Ley de Instituciones de Seguros y Reaseguros establece cuales son las diversas reservas técnicas que las Instituciones de Seguros deben constituir. Que ha finalizado el período de...
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...Essay Ethics is a social science that refers to the study of human conduct and moral principles. The role of ethics and moral judgement is increasingly playing a more significant role in the corporate world. The concepts of personal values and moral judgement are inextricably connected. As a result, I believe that as professionals, whether we choose to act according to our morally intelligent conclusion, or ignore it, is highly related to individuals underlying personal values. When professionals are required into making moral decisions, they are forced to rely on their ethical reasoning. However Maggid’s web article argues that, Modern Actuary ethics goes further than the ‘minimal legal compliance’ (Maggid, 2010). Whilst an individual may know the ethical code, does that mean he or she will choose the morally right choice? Maggid seeks to answer this issue by extending our understanding of ethics into a combination of three key components. These three components are ethical reasoning, underlying personal values and reasonable self-interest. Subsequently, Maggid supports the notion that personal values are related to whether we choose to act morally. Underlying personal values refers to an individual’s core philosophy that drives ones belief and psychological reasoning. From a young age, it is our personal values that drive our rational thinking. It is a form of identity that allows an individual to distinguish from what is right and wrong. The issue is, that in the corporate...
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...Solution to Question 41 Take the marginal density of X to be; fx(x) This implies that fxx=x1+x2xdy……………………eqn (i) Integrating eqn (i) above and solving appropriately, we have; =2xx+1-2x2………………….eqn (ii) =2x Considering the below condition where 0<x<1 & fxx=0, We can see that fy(y|X=x) =fX,Y(X,Y)fx(X)=1, x<y<x+10, Otherwise eqn…….. (iii) Looking at eqn (iii), it can be seen that (Y|X=x) becomes uniform under the interval x, x+1 Thus, from the properties of uniform distribution, it can be confidently concluded that; Mean=x+12 and Vraince=112 Thus; The conditional variance=112 Solution to question 46 Considering the graph below, it can be seen that; fT,X=fXx×fTtX=x………..eqn (i) But fXx=38x2 And fTtX=x=12x-x Considering the constraints 0 ≤x ≤2 and x t 2x and solving eqn (i), we get fT,X=12x-x×38x2 =38x Hence, for a value of t within the constraints (0<t<2) as it varies from 12t to t , then the following becomes true fTt=12ttxdx Integrating the above equation, we have; fTt=964t2 Varying the same in the interval2<x<4), we have fTt=12tt38xdx Integrating the equation and solving accordingly we get fTt=-3t264+34 Therefore, probability that a randomly chosen claim on this policy is processed in three hours or more; PrT>3=34(-3t264+34)dt Integrating the equation and solving accordingly we get; PrT>3=34-1-2764...
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...you will be working for 'the big bad insurance company' no matter how ethical your employer is. Your friends and family will complain to you about any and every insurance situation they encounter. You will have the pleasure of dealing with people who appear to sincerely believe that members of the insurance industry have the ability to grow money on trees and get a sick and twisted pleasure out of keeping that secret from the rest of society, and denying claims for no good reason. People hate insurance companies more than they hate lawyers!!! Do not underestimate the difficulty of exams. People who majored in math routinely fail the first exam multiple times. If you are not a good test taker you are going to struggle mightily with the actuarial exams. The earlier exams are multiple choice (do not make the mistake of thinking that 'multiple choice' = 'easy') and more mathematical/financial in nature. The later exams are very different: written answer exams dealing with lots of regulations and syllabi that sometimes cover as much as 2,800 pages of reading material - with less than 6 months to prepare. That said, people pass exams all the time - more and more every year in fact. The work can be rewarding. You are helping to develop/maintain a product that will help people when they need help the most - at the worst moment(s) of their lives. You will...
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...Other than staying in the actuarial field, I would like to start up a new business. In Hong Kong, current policies do not encourage teenagers engage in startup business as little resources are given, yet I believe startups will bring new ideas and eventually change the world. As there is a quote, ‘After five years, you can only see one in a hundred startups still surviving’. The reason of why often startups fail is that they lack a sustainable fund where expenses are always greater than income received. With prior actuarial experience, it tells me that solvency is the basic requirement for a company to survive. As it is of utmost importance for a startup to maintain its financial stability, with an accounting and actuarial background, I can calculate the EPVs of expenses and incomes after projection with appropriate conservative assumptions. As all companies have to buy insurance for their employees, I can choose the best insurance plans in the market with the least cost. Another important issue for a startup is about risk management. As there is a track in fellowship called Enterprise Risk Management, we can learn a lot of methods that can be used in managing a firm’s risk. By reducing the risk exposures in the firm, I can enhance my startup’s survivability. With actuarial background, we are familiar with statistics and computer programming. Whenever I want to design a new product, a thorough market research will be done so as to see whether majority of the public would...
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...merchant banks, investment managers and other financial organisations for graduates able to use analytical and numerical techniques to price financial derivatives and to manage portfolio risks. The BCom and BBusSc (Quantitative Finance) degrees cover much of the material included in the actuarial stream but courses specific to life insurance and pension schemes are replaced by additional finance and risk management courses. At the most simplistic level, quantitative finance is concerned with shorter time horizons than actuarial science. The nature of the risks being considered is different with a focus on volatility of investment markets. * Actuarial Science The BCom and BBusSc (Actuarial Science) degrees focus on producing qualified actuaries. Most actuaries in South Africa are employed either by insurance companies or as consultants managing company pension schemes, although increasing numbers are now working in investments, short-term and health insurance. Actuaries have an important role in these institutions and are widely respected. Students who graduate within this stream will be particularly well prepared for further study to obtain the prestigious FASSA (Fellow of the Actuarial Society of South Africa), FIA (Fellow of the Institute of Actuaries, UK) or FFA (Fellow of the Faculty of Actuaries, UK) designations. Students who meet the demanding standard can obtain exemptions from some two-thirds of the professional...
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...faced by insurance companies is whether they should sacrifice the benefit of the minority in order to achieve the best possible outcome for the majority. The moral principle of utilitarianism may provide justification for why insurer chooses to charge different premiums for Aboriginal people. However, those who believe more in deontology will argue that the maximum benefit achieved for everyone under the utilitarianism ethical theory is produced at an unjust cost (Santa Clara University 2014). Reasons and benefits of discrimination based on Aboriginal status While the general public views premium discrimination is an inequitable practice conducted by the insurance company, actuaries often see the meaning of equality in a different way. Actuarial equality is established on the basis of risk and fairness. The main...
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...financing. For example, the Andrew hurricane resulted in a large loss for the whole insurance industry; especially it had very deep and harmful influence on USAA Company. In order to understand its exposure to catastrophe losses, insurance companies use models to quantify losses and help them to determine their financial requirements and policies. The USAA had engaged AIR to help them. The cost of protection was determined by rate on line (ROL). In order to decrease the catastrophe loss, in traditionally, insurance companies chose to reinsure themselves against the loss. The reinsurance has different layers of protection, and the source of reinsurance had private and public types. The price of reinsurance is determined by ROL and actuarial probability, but the capacity of reinsurance industry cannot meet insurance companies’ demand because of several reasons....
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...Total Plan Risk: Integrating Assets into a Consistent Risk Framework Dan diBartolomeo Northfield Information Services, Inc. FactSet PMW Conference, Atlanta , November 2002 Do We Want to Measure Risk or Manage It? § Measuring risk is an exercise in forecasting § Managing risk requires decision making § Managing risk well requires rational decision making based on an understanding of utility theory What Risks are of Concern to Us? § Asset/liability mismatch risks § Asset class volatility § Style and active management risks How about Multiple Portfolios? § The firm-wide (plan-wide) risk problem w Multiple portfolios with multiple benchmarks w Across countries, across asset classes w Mixture of liquid, and illiquid assets, derivatives w Need to integrate liabilities Approach Number #1 § Build factor risk model for each portfolio separately and aggregate the risks § Arises from the existing stock of models § Advantage is that you are probably using the same models at the portfolio level so you have internal consistency § Problems w Not intuitive, as you can’t add exposures w Lots of factors may lead to covariance matrix which is not positive definite w Use high frequency data or an EM algorithm w Inclusion of liabilities or illiquid assets Approach #2 § Proxy each asset class with indices and then use full covariance. Adapted from trading desk systems § Advantage is simplicity. Works well for asset classes where instruments within the class are homogeneous...
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...Overview The infamous issue about the collapse of the pre-need industry sent the dreams of hundreds of thousands of people trying to graduate college crashing down. Several years ago, and seemingly out of nowhere, accusations came flying from all directions about pre-need companies. According to the accusations, they were either bankrupt or nothing but a scam, depending on which company you are looking at. And since a large portion of Filipino families relied on these pre-need companies in order to send their children to college, widespread panic ensued the moment these accusations hit the press. The biggest company to suffer was the pioneer in the industry, a company called College Assurance Plan or CAP. The CAP Family of Companies began in 1980 with the birth of its mother company - College Assurance Plan. CAP has since expanded its business to the areas of Pre-need Pension, Distance Learning, Health Maintenance, Life Insurance, Information Technology, Financing, Communications and General Insurance. It is a group of companies that the Filipino family can trust for an assured and better future – to hold on to as a true and reliable partner through the next millennium. It is also a growing and dynamic corporate family capable of serving each and every Filipino family's pre-need and insurance requirements. They had the largest number of plan holders subscribed to their pre-need education plan compared to any other pre-need company. This company was brought to its knees when...
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...Statistics as a discipline is the development and application of methods, and a collection of mathematical techniques that help to collect, analyze, interpret, and present data. Modern statistical methods involve associated tasks such as the designing and analyzing of experiments and surveys, the quantification of biological, social and scientific phenomenon and the application of statistical principles to understand more about the world around us. Statistics can also imply a second meaning, which is the computed quantity with the help of statistical methods. Thus, it could be said that the main statistics of a particular study are the median age and income of the group. Thus statistics can imply a statistical parameter as well. Statistics can be applied to various different problems and situations but the underlying concepts all remain the same. It can also be broadly classified into descriptive statistics and inferential statistics. The ideas of presenting data and drawing relevant inferences are central to the successful use of statistical theory. In the end, the statistical analysis should be able to tell us something concrete about the sample that we are studying. A number of errors are possible in the interpretation of statistical results and a careful analysis needs to be made to prevent these errors. Basically, statistics is applicable in a variety of fields, and business is not exclusive. Decision making in business is a complex thing. It is not something like “I...
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...CCST9039 Statistics and Our Society (2014-2015, 2nd Semester) Prof. W. K. LI Department of Statistics and Actuarial Science The University of Hong Kong Chapter 1: The Genesis of Statistics Part 1/2: The Genesis of Statistics Prof. W. K. LI (SAAS) CCST9039 (14-15, 2nd) Chapter 1, part 1/2 1 / 17 (I) The Genesis of Statistics What is Statistics ? Why bother ? Origin of the word same as “Status” = State i.e. Collection of figures that describe the situation of the state Ancient records of statistical activities: Babylon, the Old Testament, · · · · · · . Prof. W. K. LI (SAAS) CCST9039 (14-15, 2nd) Chapter 1, part 1/2 2 / 17 (I) The Genesis of Statistics From the book of “Numbers” in the Old Testament (1300BC?) “And the Lord spake unto Moses in the wilderness of Sinai, in the tabernacle of the congregation, on the first day of the second month, in the second year . . . saying, Take ye the sum of all the congregation to the children, after their families, by the house of their fathers, with the number of their names, every male by their polls; From twenty years old and upward, all that are able to go forth to war in Israel; thou and Aaron shall number them by their armies” A Census ! Prof. W. K. LI (SAAS) ( ) (Latin – “censere” means to tax) CCST9039 (14-15, 2nd) Chapter 1, part 1/2 3 / 17 From Moore & Notz (2009) Prof. W. K. LI (SAAS) CCST9039 (14-15, 2nd) Chapter 1, part 1/2 4 / 17 (I) The Genesis of Statistics The...
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