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April 2010 2 iv

K

km_18

Member
The question is a little confusing as it asks why the two transfer premiums are different relative to the best estimates of the liabilities when the transfer premiums are the same?
 
km_18 said:
The question is a little confusing as it asks why the two transfer premiums are different relative to the best estimates of the liabilities when the transfer premiums are the same?
Click to expand...

Hi km_18

The question isn't asking you to compare the transfer premiums for portfolios A and B - if that were the case there'd be little to say as they're the same.
It's asking for reasons why the transfer premiums may differ relative to the BEL for each portfolio. So why may the transfer premium be 1m given the BEL is 2m for A and yet 1m in the case where the BEL is 0.1m for B.

Hope that's clear.
 
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