Hi, While looking at the Examiner's report for April 2022, Q6 i), I have a doubt on the following - 1. Given the product is a term assurance, prudent mortality assumption should be higher assumptions. How is the following sentence justified - " The longer-term experience would appear to be in line with the assumptions and the long-term experience is slightly better than the assumption, indicating a degree of prudence which may indicate that there is no need to change the assumption" 2. I do not understand the meaning of assumption here in the following sentence for surrenders . The question is to state if any change to the supervisory valuation assumptions need to be made from the given actual experience and we do not have information on the supervisory valuation numbers. So I am a bit confused here. The longer-term experience appears to be higher than the assumption.
Hi Muskan The question says: "The results of the most recent experience investigations for these policies have been summarised in the table below. The results compare the actual experience across the whole portfolio over the last year and over the last 5 years, with the equivalent assumptions used in the supervisory valuation." So the table gives us the actual rate divided by the valuation assumption rate. Applying this to your first query, the table tells us that over the last 5 years, the actual mortality rate has been 95% of the valuation assumption. So the valuation assumption is higher than actual experience indicating a degree of prudence. Now looking at your second query, the table tells us that over the last 5 years the actual surrenders were 105% of the valuation assumption. So the experience is 5% higher than the assumption. Best wishes Mark
