Hi, I'm going through the sample solution for Question 1 and there's one part that I'm not sure on how to get the numbers. Quoted below: If we did not share.... then current standard premiums would be about 5% higher, and current loaded premiums would be about 28% lower. I'm not sure where the 5% and 28% come from. There was also a part where "if the adjustment was shared, then current prices would be 6% lower." Also not sure where 6% is coming from but I tried to play around with the numbers provided in the scenario material and got this: A: Standard A*/E* = 99% B: Loaded A*/E* = 72% C: Final pricing multiple = 94% 5% = A - C 6% = 1 - C 28% =/= C - B = 22% (not getting 28% for this part) Can anyone help to confirm whether my understanding on how the numbers were obtained correct or not? Thanks!
I'll leave other students to work through the calcs, but just wanted to reinforce that details like this (ie specific numbers used) are really not the key thing for CP3 - far, far more important to focus on how the messages are being communicated. The examiners indicated that different figures were acceptable here, provided they were broadly of the right magnitude (there are different ways to interpret and use the figures provided - eg whether using lives or amounts basis (referring to both would be distracting and unnecessary)).
Hi No complex calculations. The pricing multiple for amounts is -4.9% which is being applied to all policies. So if it is not applied to the policies with no loading they would be about 5% higher. The A*/E* for those with loadings is 72.2%. if you were to apply an adjustment to their experience of the policies with a loading alone it would reduce the amounts by 27.8% which is about 28%.
Thanks for clarifying on what the focus should be for the paper as well as adding on to the details of the numbers derived, Lindsay! Thank you as well for sharing the details of the calculation, Busy_Bee4422!
