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AoS

B

Benjamin

Member
Hi,

Ref: CMP, Ch17, pp.8-9

Quite a few questions on this but I will ask them all here to keep the thread neat on one topic.

1) P.8 second bullet - reads as though methodology and other changes are entered but the model not re-run at this stage. Is that correct? I'd have thought you would then re-run the model to reveal the impact of methodology changes.

2) P.8 third bullet - the second sentence "Ideally...only be changed from the new valuation date". If we are doing an annual AoS, the "new valuation date" is the end of the year, no? So seems like it's saying apply the assumption changes at the end of the year? Confused about the exact sequence of events here.

3) P.9 first bullet - says "...roll the model forward to the new valuation date...". In light of point (2) above, seems like nothing would have been changed with regards to non-economic assumptions so again, unclear on the sequence of events.
 
Hi,

I have the same concerns.

1. Second bullet point - the core reading seems to be missing a point "Rerun-the model" after making opening adjustments. Especially, that the ActEd explanation below the bullet point talks about separately identifying each impact i.e. methodology changes, other adjustment etc. The identification of the impacts can only happen by re-running the model.

2. I am also confused here by the reference to the "new valuation date". For this bullet point we are still at the last valuation date and we are considering implementing our revised non-economic assumptions at the last valuation date.
 
Benjamin said:
Hi,

Ref: CMP, Ch17, pp.8-9

Quite a few questions on this but I will ask them all here to keep the thread neat on one topic.

1) P.8 second bullet - reads as though methodology and other changes are entered but the model not re-run at this stage. Is that correct? I'd have thought you would then re-run the model to reveal the impact of methodology changes.
Click to expand...

Your understanding sounds correct - the model would be re-run at this stage to identify the impact of methodology changes.

2) P.8 third bullet - the second sentence "Ideally...only be changed from the new valuation date". If we are doing an annual AoS, the "new valuation date" is the end of the year, no? So seems like it's saying apply the assumption changes at the end of the year? Confused about the exact sequence of events here.
Click to expand...

It's suggesting that ideally we re-run the valuation at the start of the year with changed assumptions. However, rather than the changed assumptions applying from the start of the year (time 0 in our model), ideally they would only apply from the end of the year (time 1).

For example, if there's an expense assumption of £50 in each future year (old basis) that is being changed to £55 (new basis), then ideally the model will assume £50 for 1 year and then £55pa for subsequent years.

3) P.9 first bullet - says "...roll the model forward to the new valuation date...". In light of point (2) above, seems like nothing would have been changed with regards to non-economic assumptions so again, unclear on the sequence of events.
Click to expand...

This is hopefully now ok after comments above about 2?

Best wishes
Lynn
 
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