April 2019

[Actuary@22]

Hi
I have 2 queries in the A2019 paper:

1.In Q1 v),why is investment income of 100 being added in the estate movement?

Estate=Assets-(AS+NTVOG) so shouldn't ie be -100 instead since its estate movement?

2.
In Q-2 vii), didn't understand how the below mentioned points are valid here ,please explain.

Maturity claims
Even though these have increased to allow for the estate distribution ...
... the amounts remain lower than asset shares ...
... and lower than payouts on surrender

Thanks

 

[Lynn Birchall]

1.In Q1 v),why is investment income of 100 being added in the estate movement?

Estate=Assets-(AS+NTVOG) so shouldn't ie be -100 instead since its estate movement?

It's because the 100 is investment income on the assets held to back the NTVOG. So the estate movement adds this and then subtracts the increase (or adds the decrease) in the NTVOG

 

[Lynn Birchall]

2.
In Q-2 vii), didn't understand how the below mentioned points are valid here ,please explain.

Maturity claims
Even though these have increased to allow for the estate distribution ...
... the amounts remain lower than asset shares ...
... and lower than payouts on surrender

These are picking up directly on information from 3 of the bullet points at the end of the question info (ie maturity claims are smoothed assets share + a 5% increase for the estate, smoothed asset shares are appox 90% of asset shares, SVs are 100% of unsmoothed asset shares).