What is the Reserve Component Report in AXIS?
The Reserve Component Report shows the breakdown of the calculated net terminal reserve per $1,000 nominal face amount, duration by duration, starting from time zero. It provides insight into what drives the total reserve value.
What does ‘net terminal reserve per $1,000 nominal face amount’ mean?
It is the reserve held for each $1,000 of policy face amount, representing the insurer’s future liability after accounting for expected premiums and benefits. Standardizing to $1,000 allows for comparison across products.
What are the main components displayed in the Reserve Component Report?
Components include present values of death benefits, surrender benefits, other benefits, compensation/premium taxes, expenses, investment income tax (IIT), reinsurance costs, and valuation premiums.
Why does the report use ‘present values’ of components?
Present values discount future cash flows to today’s value, allowing actuaries to assess the adequacy of reserves and understand how future obligations compare to current assets.
What is the importance of viewing components per $1,000 face amount?
This standardization helps compare the relative cost or reserve requirement of different policy types, face amounts, or product designs objectively.
How is the Reserve Component Report linked to Policy Year Results?
When Policy Year Results are run from a Cell recalculation, a Reserve Component Report is produced for each product age, allowing detailed analysis of reserve behavior by policy duration and age.
Why is the Reserve Component Report important for actuaries?
It helps actuaries understand which components (like mortality, expenses, or reinsurance) contribute most to reserve levels, supporting validation, pricing, and financial reporting accuracy.
