Hello Just wanted to clarify that we can explain steps in analysis of surplus in any order as far as we do not miss out logic behind the same or is it expected to produce the steps in the same order mentioned on page 9 of ch-16 AOC? Thanks in advance
Hi It will depend on whether the questions asks for the analysis to be completed in a particular order and/or which direction (ie expected to actual or actual to expected). If not, then yes, as long as you are following the same logic and are consistent. Thanks Em
Hi Em, Something I am not quite understanding in the AoS question at the end of Chpt 16 (part iv). When you step through changing the assumptions from expected to actual why for the expense assumption does the liability side remain unchanged? Should the 30 not change to 25 as well? Thanks
Hi Donal The liability stays unchanged because the valuation expense basis remains at $30 pa for the end of year. The liability will only be impacted by the actual experience if the number of policies inforce change or if there is a change in the valuation basis as a result. Does this help? Thanks Em
