There are many topics covered in SA2. However, if you have a fundamental understanding of the two concepts, then many other topics will fall into place. These are:
- Valuation
- Pricing
Valuation relates, for example, to:
- GPV, NPV reserving including principles of setting reserves
- Solvency requirement: both solvency I and II
- Financial reporting basis valuation and statutory valuation (Modified Statutory Basis)
- AoS
- etc...
Pricing relates, for example, to:
- Embedded value including AoEV and VNB
- Cash flows (income items less expense items)
- Cost of capital
Note that CT5 techniques are required for both.
If you are working in a Life company, best is if you get hold of Excel spreadsheets used to calculate reserves, embedded value, solvency capital, etc. If you can picture the above concepts in Excel spreadsheets it will help greatly.
You need to have a really good fundamental understanding of these two concepts if you want to pass.
In many Life related job specs, you will also note that many of the positions are valuation/capital management or pricing/product development. That is because these two are major areas in the Life industry.
If I were you I would try and get hold of the following and learn them in detail:
- Year-end valuation report signed-off by a statutory actuary with information relating to assets, actuarial liabilities, assumptions, risk management, product description, solvency capital requirement, reliances and limitations, embedded value, AoEV, revenue account (income statement), etc... (such report is not the same as the published financial report)
- Product profit testing or product sign-off report/letter with VNB, profit margin, sensitivity testing, etc.
- FSA return forms already filled in
Last edited by a moderator: Oct 25, 2013
