April 2016 Q 12 (ii)

Discussion in 'CT5' started by SarahGreenop, Apr 8, 2018.

  1. SarahGreenop

    SarahGreenop Member

    Hi there

    For the Q12 (ii) in the April 2016 exam, would someone please explain to me why the expected future renewal expense has NOT been added to the prospective reserve calculation before alteration?

    I appreciate the feedback.

    Regards,
    Sarah Greenop
     
    SarahGreenop, Apr 8, 2018
    #1
  2. Sid Kumar

    Sid Kumar Member

    This is on account of the reserving basis as stated in the question: Essentially you are calculating a prospective reserve using the office premium
    The company calculates prospective gross premium policy reserves for the purpose of
    the alteration using the following basis:
    Mortality AM92 Ultimate
    Rate of interest 6% per annum
    Expenses ignore
    Future bonuses ignore
     
    Sid Kumar, Apr 10, 2018
    #2

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