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Reserving principles

L

lovitta

Member
I don't understand what it means to say 'the method should recognise profits appropriately and should not be subject to discountinuities arising from arbitrary basis changes'.

Can someone help please. Thanks
 
Hello

The point about arbitrary basis changes is essentially that the the actuary should avoid making changes to the valuation basis with the sole aim of manipulating the resulting reserves.

The point about emergence of profit is expanded on in the subsequent 2 sections in Chapter 21. Is there a particular point that's causing a problem?

Hope the revising's going well
Lynn
 
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