Monitoring

Question 1

Reasons for monitoring

Answer 1

• compare actual vs. expected to take corrective action
• for management information
• determine the financial impact of actual not equal to expected
• determine the assumptions which are the most financially significant
• identify trends

from an underwriting and reinsurance perspective
- can help determine the level of risk/reinsurance to take on
- help inform profit sharing values
- help to update underwriting procedures
- determine if anti-selection is taking place

Question 2

Reasons for analysis of surplus

Answer 2

• check valuations
• check which assumptions are most financially significant
• check financial effect of assumptions not being as expected
• for management information
• to determine non-recurring surplus components which can be distributed to with-profits policyholders
• identify trends
• from EV analysis perspective
  > check the successive valuations are in line
  > check that values are correct from published reports perspective
  > ensure that value for executive remuneration is determined
  > check data, assumptions and method is correct