Hi, In case of a company which has without-profit and with-profits policies in the closed fund, where the without-profit business includes immediate annuities which have a longer outstanding duration than that of with-profits business. When considering the distribution of profits which needs to be managed carefully in the closed fund include points regarding the distribution of estate (pace of the distribution)? Thanks
Apologies but I don't understand the question - please could you ask it again (rephrased) to make clearer exactly what you are asking
Hi Apologies as I was not clear before, I want to ask in case of distribution of a closed fund (which includes without-profit and with-profit policies) and where without-profit policies have a longer outstanding duration, how would the estate distribution be impacted? Would the company need to completely diminish the estate by the time with-profits are run-off or can the estate be held till the without-profit policies run-off (which would be later)?
The estate belongs to the with-profits policyholders (with an appropriate share going to the shareholders), not the without-profits policyholders. Hence it needs to be distributed to the with-profits policyholders before they have all left. Of course, that then leaves the insurance company with the problem of not having any capital left in the WP fund to support the risks in relation to any remaining without-profits business. This is part of the issues and considerations described in the course notes in relation to this situation (Chapter 20 Section 1.3).
