September 2015 Question 1

[dChetty]

In the solution when they refer to policy counts are they referring to average policy counts over a long future period and this average policy counts over a long future period will be used at the valuation date? Please advise.

 

[Mark Willder]

This is quite a lengthy solution. It would be helpful if you could say which part you are referring to.

 

[dChetty]

Thanks Mark. I appreciate your help. I am referring to part ii) when the solution mentions run-off patterns.

 

[Mark Willder]

Thanks Mark. I appreciate your help. I am referring to part ii) when the solution mentions run-off patterns.

I can't find any reference to policy counts in the solution, but I'm assuming that you're referring to the number of in-force policies in the following paragraph of the Examiners Report on the run-off pattern:

"The per policy valuation expense assumption would be derived from the expectation of total pension expenses, divided by the number of in-force policies where this spread across policies needs to take into account the future run-off pattern of the total expenses and the future run-off pattern of the number of pension policies."

The above indicates that there will be a separate assumption for each future year where the per policy expense that year is the expenses in the year divided by the number of policies in that future year. The point being made is that the number of the current policies that will still be in force in the future will gradually decline over time.

I'm afraid that, in fairness to other students, I won't be able to answer all of your queries. This is a very busy time in the run up to the exams, not just with this Forum but elsewhere, eg tutorials. It takes a considerable amount of time to answer queries, particularly if it is not clear what question is being asked. You have asked a very large number of questions so far, and I think it is only fair that I answer questions from other students.

Best wishes

Mark

 

[dChetty]

Hi Mark. Thank you. I have noticed that my questions generally take quite long to be answered. For example I posted questions on assignment 3 more than 2 weeks ago and only 2 or 3 of these questions have been answered in more than two weeks. I don't think that's fair to me. I am not expecting you or the other tutors to answer my questions immediately but you or the other tutors to answer them over a reasonable time period. Answering my questions would certainly encourage me. Regards

 

[Pede]

DChetty, these forums are free and designed for students to answer each others' queries, tutors can't possibly answer them all, particularly when there are so many. Have a read of the 'guidance on posting' thread on the front page and you'll see some tips. Have you considered personal tuition or tutorials? They worked for me (and that's a paid-for service).

 

[dChetty]

Hi Mark. I will continue to post questions. Please answer those for which you or other tutors have the time.

Thank you