Part i) Impact on assets is quite straightforward,
Risk margin and SCR is also ok.
BEL- I understand why BEL for with profits will be Asset share+ Cost of guarantee. This was also a question in Sept'22 paper.
However, while explaining BEL impact, wouldn't we typically consider just the fall in interest rate (hence higher BEL, like without profit policies)? Instead of breaking BEL into asset share and COG.
None of the remaining stresses will affect BEL directly hence only interest rate risk is relevant.
Typically, when we assess BEL impact,
UL BEL= impact on unit reserve and impact on non unit reserve
Non UL and non annuity BEL= PV of benefits + PV expenses - PV premium
Annuity BEL (immediate only)= PV of benefits +PV of expenses
For with profits, PV of benefits includes guaranteed bonus and assumption about future reversionary and terminal bonus.
Why not break the impact in this manner instead of with profits BEL= Asset share + CoG (difficult to come up with under exam conditions, unless Core Reading mentions this)?
Risk margin and SCR is also ok.
BEL- I understand why BEL for with profits will be Asset share+ Cost of guarantee. This was also a question in Sept'22 paper.
However, while explaining BEL impact, wouldn't we typically consider just the fall in interest rate (hence higher BEL, like without profit policies)? Instead of breaking BEL into asset share and COG.
None of the remaining stresses will affect BEL directly hence only interest rate risk is relevant.
Typically, when we assess BEL impact,
UL BEL= impact on unit reserve and impact on non unit reserve
Non UL and non annuity BEL= PV of benefits + PV expenses - PV premium
Annuity BEL (immediate only)= PV of benefits +PV of expenses
For with profits, PV of benefits includes guaranteed bonus and assumption about future reversionary and terminal bonus.
Why not break the impact in this manner instead of with profits BEL= Asset share + CoG (difficult to come up with under exam conditions, unless Core Reading mentions this)?