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embedded value

  1. P

    Embedded value

    Hi, can you please explain the difference between surplus arising and embedded value profit during the year? Question 2 from April 2008 asks for the embedded value profit, and while I understand the calculation of EV profit, I am unclear on how this is different to surplus arising.
    • p_0910
    • Thread
    • embedded value
    • Replies: 7
    • Forum: SA2
  2. R

    Chapter 31 Problem solving

    Hi all, I was reading the answer to the question "how embedded value moves when the actual experience is worse than the EV projection basis" I understand that both free assets and PVFP reduces as a result but I am unable to understand how to compare the extent of this reduction. The core...
    • Riya Arora
    • Thread
    • embedded value free assets pvfp
    • Replies: 1
    • Forum: SP2
  3. K

    Sept 2011, Q4, Embedded Value

    Hi, In Sept 2011, Q4 part iii, Can you please explain how increasing the level of prudence will impact EV of With Profit contracts in 2 parts i.e impact on net assets and PV of future profits?
    • Komal Gupta
    • Thread
    • embedded value sp2
    • Replies: 2
    • Forum: SP2
  4. P

    Embedded Value - allowance of Risk Margin

    Hi, Could you please help me to understand the following - EV related questions: Que 1: Could you please confirm to me the various ways in which RM can be allowed in EV ? I understand that there are two ways: a) Adding RM with "Required Capital" component and deducting the cost of holding it...
    • prachi
    • Thread
    • embedded value risk margin
    • Replies: 14
    • Forum: SA2
  5. P

    Embedded Value

    Hello, I am bit confused on "Return on in-force business" item for determining the analysis of change in EV calculation. (let's Define EV as= free assets + SCR & RM after deducting cost of holdings + PVIF , lets assume PVIF is being getting calculated by the company) ( as written in X4.2...
    • prachi
    • Thread
    • embedded value pvif sa2
    • Replies: 12
    • Forum: SA2
  6. K

    General Doubts related to Modelling and Reserves

    Q:1 Core reading said that if Supervisory reserves are taken as prudent then do not consider Lapses. If supervisory reserves are realistic (market consistent) then do consider lapses explicitly in reserving basis. How removal of lapses will make my reserves prudent? Q.2 What does it mean when...
    • Kamal Sardana
    • Thread
    • embedded value reserves sp1
    • Replies: 1
    • Forum: SP1
  7. K

    Ch 20 and Ch 21 Doubts - Core reading

    Ques 1 - Ch20 - Valuing mortality option --I did not understand the italic line here -- " " " An alternative assumption would therefore be that the mortality of those who do not take up the option is such that average mortality for all lives remains at the base expected level. The assumed...
    • Kamal Sardana
    • Thread
    • embedded value mortality options sp1
    • Replies: 1
    • Forum: SP1
  8. V

    September 2011 Question 4 (i) embedded value

    Hi In the revision books, the answer for this question says that it is assumed that the non-unit reserves do not increase with interest. Firstly, what would be the reason for this? Secondly, why do the cashflow projections under column 5 start with an amount of 500. If the non-unit reserves...
    • VSA_88
    • Thread
    • embedded value non-unit reserves question 4 reserves september 2011 sp2 st2
    • Replies: 1
    • Forum: SP2
  9. C

    Analysis of surplus vs EV - Return on opening surplus

    Is the return on opening surplus calculation under Analysis of surplus the same as the return on net assets calculation under Embedded value. AoS : Formula The course notes seem to describe the AoS's calculation as: Opening surplus (A - L) * actual return + Opening L (backing assets) * (actual...
    • curiousactuary
    • Thread
    • analysis of suplus embedded value sa2
    • Replies: 1
    • Forum: SA2
  10. C

    Goodwill in the apprasial value

    I understand that EV relates to profits arising from existing business. 1. Does goodwill witihn the appraisal value relate to expected future profits from new business? 2. If not, how is goodwill valued and would expected new business be ignored in the calculation of appraisal value just as it...
    • curiousactuary
    • Thread
    • appraisal value embedded value goodwill
    • Replies: 1
    • Forum: SP2
  11. C

    What is meant by agency costs?

    What is meant by agency costs? This is in relation to the EV
    • curiousactuary
    • Thread
    • embedded value sa2
    • Replies: 1
    • Forum: SA2
  12. C

    Can a lapse assumption that lowers reserves be used under Solvency II?

    Question 7iii of ST2 Septemeber 2009 compares embedded value assumptions against assumptions used to calculate statutory reserves. 1. I assume statutory reserves in the UK mean solvency II reserves, specifically the best estimate liability? It says "It is likely that supervisory reserves will...
    • curiousactuary
    • Thread
    • embedded value solvency ii
    • Replies: 3
    • Forum: SA2
  13. C

    What is shareholder tax - embedded value

    Q7iii of September 2009 discusses how the assumptions under embedded value compare to those used to calculate any supervisory reserves. For tax it says "the embedded value would need to allow for shareholder tax on profits, but this would not be appropriate for the calculations of supervisory...
    • curiousactuary
    • Thread
    • embedded value sa2 sp2 tax
    • Replies: 3
    • Forum: SP2
  14. C

    What are shareholder transfers

    I've read in a past paper solution that the embedded value equals the "present value of shareholder transfers. e.g. as generated by bonus declarations". When it comes to shareholder transfers under a 90:10 fund - are there two components to it as follows: 1. 1/9th of the present value of the...
    • curiousactuary
    • Thread
    • embedded value estate shareholder transfers sp2
    • Replies: 1
    • Forum: SP2
  15. P

    Embedded value basis

    Why must embedded value basis be "best estimate"? I see in chapter 18 page 15 it is said that EV basis is more likely to be best estimate.
    • Phani Vasantarao
    • Thread
    • embedded value
    • Replies: 1
    • Forum: SP2
  16. M

    With-profits EV

    I was hoping to get some help on this but thought I'd start a new thread. I'm struggling to grasp the way it's explained above given that PVIF = PV(shareholder cashflows) + PV(change in reserves) My understanding is: The projected assets would also include: (charges for cost of smoothing...
    • Mbotha
    • Thread
    • embedded value estate inherited estate pvif risk margin shareholder transfers with profits with-profits
    • Replies: 14
    • Forum: SA2
  17. B

    EV - contract renewals

    Hi, Ref 1: CMP, Ch 19, p.12, "Principle 8" Ref 2: Q&A Bank, Part 4, Solution to question 4.4(iii) Could you please comment on the status of a recurring single premium in the context of inclusion in EV? The core reading says "The value of new business includes the value of expected renewals on...
    • Benjamin
    • Thread
    • embedded value new business recurrent single premium
    • Replies: 1
    • Forum: SA2
  18. B

    EV components

    Hi, Ref: Q&A bank, Part 4, solution to question 4.4(ii) With respect to EV, are the terms PVIF and PVFP not interchangeable? The notes (CMP, Ch19, p.5) say that they are interchangeable but this question asks for a method to calculate PVFP and the solution awards 2 out of 7 marks for...
    • Benjamin
    • Thread
    • embedded value pvfp pvif
    • Replies: 2
    • Forum: SA2
  19. M

    With Profits EV

    I'm a bit confused about the EV for WP business: PVIF = (PV of projected cashflows) - (PV of change in reserve) = (a) - (b). I'm not sure how to calculate (a): Is this a projection of the asset share? How do we allow for shareholder transfers when these are usually deducted from the asset...
    • Mbotha
    • Thread
    • embedded value free assets net assets pvif with profits with-profits
    • Replies: 5
    • Forum: SA2
  20. P

    Embedded Value for Without-profits contracts

    Chapter 13, page 17: core reading text says "For without profits business, embedded value is effectively the release of any margins within the supervisory reserves relative to the assumptions used within the embedded value calculation." What do we mean here by release of margins? Does this...
    • Phani Vasantarao
    • Thread
    • embedded value st1
    • Replies: 2
    • Forum: SP1
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