F70LP Life Office Practice

Prof Angus Macdonald

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


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: Due to covid, assessment methods for Academic Year 2021/22 may vary from those noted on the official course descriptor. Please see:
- Maths (F1) Course Weightings 2021/22
- Computer Science (F2) Course Weightings 2021/22
- AMS (F7) Course Weightings 2021/22

SCQF Level: 10.

Other Information

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

Canvas: further information and course materials are available on Canvas