This is a Q related to Sept 2008 Q2(ii). I always assumed that one condition of negative NURs was that in aggregate, NURs > 0. However this question implies that the actual condition is for total non-linked reserves to be greater than zero. Which is the case? In the Q solution, it is assumed the negative NURs are allowed up to a maximum of the reserves on the annuities (only other non linked business written). Thanks
It is not necessary for the aggregate non-unit reserves of unit-linked policies to be positive. Conventional contracts have non-unit reserves too. We don't normally think of an annuity as having a non-unit reserve, but it does. Any reserve that isn't a unit reserve is a non-unit reserve. So the condition is that the aggregate non-unit reserves (of unit-linked plus non-linked policies) needs to be positive. So negative NURs are allowed in this question up to the reserves held on annuity business. Best wishes Mark
