withdraw assumption + negative reserve

Discussion in 'SP2' started by uktous, Aug 3, 2009.

  1. uktous

    uktous Member

    hi,
    Reserve can be negative at early duration.

    When we set withdraw assumption in pricing and reserving basis, what special allowance / treatment should be made?
     
  2. If you hold a negative reserve, then that means you have capitalised some future profits. However, if the policyholder withdraws in early durations then the negative reserve would have capitalised profits prematurely...

    I think the solvency capital would allow for this risk.
     

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