Srishti Goyal
Member
Hi,
I have a confusion regarding my interpretation for Ques 1 of April 2023.
"QUES: The company has carried out an analysis of its supervisory valuation surplus. Statutory liabilities are assessed on a best estimate basis and required capital is assessed on a risk-based approach that is the same as Solvency II. Initial output from this analysis identified a significant positive non-economic variance.
(i) Discuss possible reasons for this result."
My Interpretation:
Ques is asking about the Analysis of Surplus and has mentioned Positive Non-economic Variance.
By Variance it means: Actual less the Expected.
Non-Economic Variance means: Mortality, Lapses, Expenses and mix of business(optional).
Positive means: Actuals are higher than expected
Based on this interpretation, I will draft the answer focusing on higher mortality, higher lapses and higher expenses.
However, in the exam report, they have mentioned about lower lapses and lower expenses.
Can anyone please help me understand what the correct approach is to interpret the answer here.
Thanks in Advance.
I have a confusion regarding my interpretation for Ques 1 of April 2023.
"QUES: The company has carried out an analysis of its supervisory valuation surplus. Statutory liabilities are assessed on a best estimate basis and required capital is assessed on a risk-based approach that is the same as Solvency II. Initial output from this analysis identified a significant positive non-economic variance.
(i) Discuss possible reasons for this result."
My Interpretation:
Ques is asking about the Analysis of Surplus and has mentioned Positive Non-economic Variance.
By Variance it means: Actual less the Expected.
Non-Economic Variance means: Mortality, Lapses, Expenses and mix of business(optional).
Positive means: Actuals are higher than expected
Based on this interpretation, I will draft the answer focusing on higher mortality, higher lapses and higher expenses.
However, in the exam report, they have mentioned about lower lapses and lower expenses.
Can anyone please help me understand what the correct approach is to interpret the answer here.
Thanks in Advance.