M
misterh
Member
The line of the solution: "In particular, very prudent assumptions would transfer higher amounts to shareholders, to the detriment of policyholders." I understand that the amount paid to SH is driven by the bonuses declared to PH so how can the company potentially abuse this (pointed out in previous paragraph of solution). Aren't they paid amounts relative to each other? (ignoring the timing difference) Also I thought that bonuses were declared on statutory surpluses - wouldn't making the reserves more prudent reduce the level of bonuses that could be declared?