Mastering Practical Actuarial Modeling: A Comprehensive Guide
School
Strathmore University**We aren't endorsed by this school
Course
FINANCE APM
Subject
Accounting
Date
Dec 12, 2024
Pages
2
Uploaded by JudgePantherPerson499
STRATHMORE INSTITUTE OF MATHEMATICAL SCIENCES BBS ACTUARIAL SCIENCE BSA 4123 :Practical Actuarial ModelingCAT 3 DATE: 7thDecember 2020 TIME: 3 HOURS Instructions: 1.You will require your own laptop computer for this CAT and in using your laptop you MUST obey the instructions that follow: 2.The CAT shall be available on Google classroom. Link to classroom and password are Link https://classroom.google.com/c/MTc2OTAwOTQ4NjY5?cjc=2k7o46p Password 2k7o46p 3.You must submit your work by Wednesday 9thDecember 2020 8am. No extensions will be allowed. Submit your work early to avoid problems with you internet connection/ power blackout. 4.Your laptop must have a recent version of MS Excel Spreadsheet software installed and in good working condition. 5.Upon starting your work Download the following items 1 CAT 3 - question paper 2 AM92Ult tables Save the question model as follows “studentregistrationnumber.xls”. If your student registration number is 098765 then your saved spreadsheet should read: 098765.xls. You shall do all your calculations on this spreadsheet. You may also do your audit trail on this spreadsheet or separately as a word document. The word document must also appropriately saved. 6.The CAT consists of only ONE question written on the following page of this question paper. You must read the question in its entirety before attempting to answer it. 7.The question is marked out of a Total of 50 marks, and comprises 20% of your grade for this unit this semester.
You run a recently established insurance consulting business that advices insurance companies on strategic aspects of selling policies and technical aspects of pricing and reserving. One of your clients is the biggest seller of whole of life assurancepolicies in Kenya and is concerned about the increased mortality of assured lives due to the current Covid19 pandemic and the impact that this has on premiums paid. He also anticipates that the return on investment for premiums invested will be reduced for a number of years, at least until some sense of normalcy returns. He has approached you to do some calculations. Scenario 1.Determine the premiums paid on whole life assurance policies for entry ages 30 to 55 based on the following assumptions oMortality tables AM92Ult oLevel sum assured KES 1000 (benefit paid at the end of the year of death) oPricing rate of interest 6% per annum [15] Scenario 2.On increased premiums due to pandemic. Determine premiums based on the same assumptions as scenario 1 but with mortality increased by 30% from ages 58 onwards. [5] Scenario 3.On increased premiums due to reduced interest rates Determine premiums based on the same assumptions as scenario 1 but with pricing rate of interest reduced to 4% per annum. [5] Scenario 4.Combination of scenario 2 and 3. [10] Draw a chart comprising all the four scenarios and make a comment on your results. [5] Write a simple and clear audit trail explaining your work. [10]