Hi,
In the September 2018 question paper, Q4 (Embedded Value), Part iii). In the examiner's report it is mentioned that present value of a projection of future bonuses would need to be determined including the distribution of with profits fund estate over the remaining lifetime of the existing policies.
My question is doesn't the above part relate to the cost of bonus? So why is it mentioned again in the answer?
The surplus that we distribute as bonuses generally contains the profit due to difference between experience basis and premium basis. Also sometimes it considers the profit from non-profit policies but does it also distribute part of the estate which has been built up over the years in with-profits fund?
Last edited: Mar 21, 2022