F70LP Life Office Practice

Prof Angus Macdonald

Course co-ordinator(s): Prof Angus Macdonald (Edinburgh).

Aims:

To introduce students to the actuarial techniques available to manage financial guarantees arising in life insurance companies in the course of their business operations.

Detailed Information

Course Description: Link to Official Course Descriptor.

Pre-requisite course(s): F70LA Life Insurance Mathematics A & F70LB Life Insurance Mathematics B .

Location: Edinburgh.

Semester: 2.

Learning Outcomes: Subject Mastery

At the end of studying this course, students should be able to:

  • describe the asset types held by life companies and discuss their suitability to back different types of contract
  • calculate the value of an insurer’s liabilities using both net and gross premium prospective valuations
  • calculate the surplus arising on a portfolio of insurance contracts
  • calculate non-profit premiums using the traditional method and the risk discount rate method
  • discuss the ownership of surplus and the different types of bonus system which can be used to return surplus on with profits contracts
  • calculate asset shares and describe their uses
  • discuss how an actuary determines an appropriate level of reversionary and terminal bonuses for with profits contracts
  • describe how unitised with-profits contracts work
  • perform a simple analysis of surplus
  • discuss the concept of solvency for a life insurance company and describe mechanical and model-based solvency margins
  • calculate the fair value of life insurance liabilities
  • discuss the concept of mismatching reserves
  • discuss capital requirements for life insurance companies
  • compare and contrast the lognormal and Wilkie models of equity returns
  • carry out a simple asset/liability investigation of a life insurance company

Assessment Methods:

This course and Pensions will be examined together in a 3-hour exam (80%) at the end of the 2nd semester. Both courses will have an assessed project (10% each).

SCQF Level: 10.

Other Information

Help: If you have any problems or questions regarding the course, you are encouraged to contact the lecturer

VISION: further information and course materials are available on VISION