I had a question regarding two counterparties specifically reinsurer and distribution channel's impact on the profitability: Would the increase in fees charged by the reinsurer or the potential default of the reinsurer or any change in terms where only a part of the business is reinsured contribute to the volatility of the profits? Would any change in distribution channel and their renumeration impact the profitability? Thanks
These points would indeed impact profitability, but feel like they might be rather too second-order to gain credit in the exam. For example, changing distribution channel so paying higher remuneration seems like a specific example of expenses being higher (of which there could be very many other examples) or of incurring the one-off costs of making such a change (ditto). In terms of reinsurance, bear in mind that the course talks more about using longevity swaps to manage longevity risk on annuities, so that could have been a more beneficial area to consider.
