Q
QueryST
Member
I want to know how assetshare is used to calculate bonus for par product
Asset share can be used to help calculate both the regular and terminal bonuses for participating (with-profits) products.I want to know how assetshare is used to calculate bonus for par product
I have more question on this,we follow to calculate bonus scope as that Assetshare - (BEL+COC+shareholder'strasfer PV) ? Why we use this method to calculate bonus scope ?
Thanks Mark for reply!
What i understood that there are different approaches to calculate reversionary Bonus scales using Asset share either through BEC or above mentioned approach . Am i correct ?
I am bit confuse with surplus relation with Asset share and reserve.
I heard that surplus is (difference in actual experience and assumptions at time of pricing regarding mortality ,expense,interest rate ) Then if we are comparing AS and BEL ,then how we are calculating surplus to distribute to par policies?
Sometimes i heard that surplus is (difference in actual experience and assumptions at time of Reserving regarding mortality ,expense,interest rate ) ? Please clear me on this . I am sorry if i am asking very simple or too weird.
Hi Mark,Surplus is the assets less liabilities.
The surplus arising (sometimes confusingly referred to as surplus) is the change in surplus over the year. It arises because the actual experience has been different to that expected (and also due to any interest on the existing surplus). It is this surplus arising that we want to distribute as bonuses.
Surplus can be measured in different ways, eg depending on what we include in the reserves. In your comments above you refer to the BEL (best estimate liabilities) which is the starting point for reserving calculations such as the Solvency II regulations used in the EU. However, using this as a means of calculating the surplus to distribute to policyholders is complex and beyond the scope of the ST2 course.
In the surplus distribution chapters of ST2, we consider a traditional reserving approach where assumptions include margins. The reserves are therefore bigger than the BEL and so we would expect that actual experience will usually be better than expected, ie we will have surplus arising. It is this surplus that we then distribute through bonuses.
I get the feeling from the terminology you have used in your questions, that you are trying to reconcile the ST2 course to the approach you use at work. But that is beyond what we can cover in the ST2 Forum.
Best wishes
Mark
Subject ST2 covers distributing surplus using the addition to benefit (both conventional and unitised with-profits), revalorisation and contribution methods.Hi Mark,
Can you explain how the surplus distribution is getting different in SA2?
Thanks
thanks MarkSubject ST2 covers distributing surplus using the addition to benefit (both conventional and unitised with-profits), revalorisation and contribution methods.
Subject SA2 currently covers the UK situation in more detail. So it uses the additions to benefit method and links into current UK regulations such as Solvency II.
Best wishes
Mark