CMP, Chapter 4

Chapter 4, Page 5
Say, insurer collects $12 for each unit valued at $10. Is the bid-offer spread $2, i.e. 20% of unit value?

Chapter 4, Page 19
“Insurer insolvency should be less under a conventional without-profits contract to the extent that future surpluses can now be used to maintain solvency, before being distributed to policyholders”.

Why is future surplus being distributed to policyholders since this is a without-profits contracts?

Where is the idea of future surplus coming from? It doesn’t seem to have appeared elsewhere in the notes.

Thanks in advance. Any help is much appreciated 

 

Could be, but more likely to be expressed as a percentage of the premium so 17% of premium. Though that would be a high b/o spread.

P19: this is in section 3.2, with -profits?
It says 'less than under' comparing against without profits.
But note the sentence underneath. It says don't worry about this yet.