• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

7 main uses of asset shares

M

margaret.emery

Member
Below is a question from Smart Revise.

What is the difference between use (1) and use (3)?

Thanks!


List the 7 main uses of asset shares in respect of with-profits business.
Answer:

1. As a benchmark for determining the level of payouts

2. As a tool for the consideration and quantification of TCF

3. As a guide for determining maturity values and surrender values

4. To help the smoothing process for maturity values

5. As a guide to the appropriate level of regular annual bonus

6. To help with projections for various documents

7. Establishing a realistic solvency position for reporting purposes
 
I am guessing level of payout in (1) includes regular reversionary bonus and terminal bonus

Below is a question from Smart Revise.

What is the difference between use (1) and use (3)?

Thanks!


List the 7 main uses of asset shares in respect of with-profits business.
Answer:

1. As a benchmark for determining the level of payouts

2. As a tool for the consideration and quantification of TCF

3. As a guide for determining maturity values and surrender values

4. To help the smoothing process for maturity values

5. As a guide to the appropriate level of regular annual bonus

6. To help with projections for various documents

7. Establishing a realistic solvency position for reporting purposes
 
I am guessing level of payout in (1) includes regular reversionary bonus and terminal bonus

Are you saying that (3) (... As a guide for determining maturity values and surrender values ...) does not include RB and TB? How does that work?
 
Are you saying that (3) (... As a guide for determining maturity values and surrender values ...) does not include RB and TB? How does that work?

3 is as a guide for maturity and surrender - so this would be more about TCF and what is in PPFM as to surrender values. I.e surr value can't be less than AS.
 
Below is a question from Smart Revise.

What is the difference between use (1) and use (3)?

Thanks!


List the 7 main uses of asset shares in respect of with-profits business.
Answer:

1. As a benchmark for determining the level of payouts

2. As a tool for the consideration and quantification of TCF

3. As a guide for determining maturity values and surrender values

4. To help the smoothing process for maturity values

5. As a guide to the appropriate level of regular annual bonus

6. To help with projections for various documents

7. Establishing a realistic solvency position for reporting purposes

Are you saying that (3) (... As a guide for determining maturity values and surrender values ...) does not include RB and TB? How does that work?

I think maturity values consider TB.
(1) is more on the sustainable rate of future bonus
 
I think by benchmark here they mean the target range as per PPFM where firms must specify target ranges around 100% of unsmoothed asset share within which 90% of maturity payouts must lie (including SVs).
Asset share is used as a guide for MVs and SVs to determine how much TB or MVA they can/should apply. There is a level of discretion here subject to the above PPFM. Other considerations such as competitive pressure may come into it and smoothing etc.
This is how I understand it...
 
Back
Top