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September 2023 2(iii)a

T

TanishaS

Active Member
Hi
Can you please check if the below points can be made for this question or would they be considered irrelevant?
  1. The returns from the unit linked business is less than expected by the customers
  2. The expenses are higher than expected
  3. The company would be making a loss on with profit business
  4. In case the unit linked business is not priced correctly it could be loss making as well
  5. The company is not able to achieve cross subsidies between the two lines of business
  6. The assets backing the with-profits business do not sufficiently cover the liabilities
  7. Large number of people have resigned from the company, there is resource constraint in the company
  8. To provide better services to its customers, it would be better to transfer the company
  9. There are delays in addressing customer queries and complaints
  10. There is an error made in the pricing of the product which will lead to a large loss once rectified example incorrect units allocated
  11. The charges on unit linked products are lower than expected to receive
Thanks
 
Hi - apologies but the forum isn't designed to provide marking assistance. You will be able to tell whether points would gain credit by checking against the marking schedule provided in the Examiners' Report or in our ASET product. If the points (or something very similar to them) are not listed there, they would not gain marks.

The question is asking for reasons why the Board of an insurer has decided to sell the company to another insurer. From looking quickly at your suggested points, most of them seem to be about reasons why the company might be making low profits (or even losses). This in itself does not sound like a particularly good driver for selling the business: anyone looking to purchase it would see that it is unprofitable and therefore only pay a very low consideration for it.

Looking at the information provided in the scenario, the facts that the company's capital position looks weak and that it has a closed with-profits portfolio look like they are going to be the main drivers behind the decision that has been made - so the reasons should be developed from those key issues.
 
No problem - just remember that it is very important in SA2 to read, understand and then reflect carefully the given scenario information within your answers.
 
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