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Overview of Experience for Long -term Insurers in SA 2006

Overview of Experience for Long -term Insurers in SA 2006. Hantie van Heerden Elash Mistry 14 Nov 2007. Why are we here?. To provide information to practicing life actuaries on representative SA Statutory Valuation Method bases reported in 2006.

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Overview of Experience for Long -term Insurers in SA 2006

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  1. Overview of Experience for Long-term Insurers in SA 2006 Hantie van Heerden Elash Mistry 14 Nov 2007

  2. Why are we here? To provide information to practicing life actuaries on representative SA Statutory Valuation Method bases reported in 2006

  3. Brief overview of the LT insurance market in 2006 Review the representative: Reported AOS results (C7), Reported valuation assumptions (G10.x) and Reported actual experience (B - statements) for certain key elements in a valuation basis What will we show you?

  4. Overview of the LT Insurance Market in 2006

  5. Overview: rankings

  6. Overview: by year-end

  7. Overview: by license

  8. Overview: per business class

  9. Overview: growth by license

  10. Overview: growth per business class

  11. Overview: over time

  12. Overview: key indicators t = typical; l = linked; r = reinsurer; a = assistance; n = niche; c = captive

  13. Overview:asset compositionper industry

  14. Capital Adequacy Requirement (CAR)

  15. Distribution of CAR

  16. OCAR breakdown

  17. Management action over time

  18. Proportion of insurers that applymanagement action

  19. Examples of management actions used: Reduce future bonuses Reduce/Remove non-vested bonuses Reduce bonus smoothing reserve Implement additional surrender charge Management action

  20. Analysis of Surplus (AOS)

  21. Overview - AOS

  22. Profit as a % of net written premium

  23. Expenses

  24. Split of expense losses

  25. Expense inflation assumption

  26. 4% 21% 8% 21% 3% 79% Actual expense inflation

  27. Initial per policy expense assumption

  28. Actual initial expense(individual business)

  29. Actual initial expense(individual business)

  30. Actual initial expense(individual business)

  31. Renewal per policy expense assumption

  32. Actual operating expense(individual business)

  33. Central Discount Rates

  34. Assumed central discount rate

  35. Observed investment yield

  36. Cumulative distribution of assumed real returns

  37. Mortality

  38. In the graphed rates, we tried to determine representative mortality rates For assured lives we used SA85/90 ultimate 100% heavy to place weighted rates in perspective. For annuitants we used a(55) to put weighted average rates in perspective. Mortality

  39. Assurance mortality per industry Male Smokers without AIDS loading

  40. Change in mortality for assured lives from 2005 to 2006 Smoker without AIDS loading

  41. AIDS loading comparison for 2005 and 2006 Mortality for Assured Lives Male Smoker

  42. AIDS loading by industry Mortality for Assured Lives Male Smoker

  43. Annuitant mortality by industry Male Smoker

  44. Change in mortality for annuitants from 2005 to 2006

  45. For assurance products: Individual: 79% (79%) actual vs. expected Group: 90% (93%) actual vs. expected For annuity products: Individual: 114% (114%) actual Group: 87% (93%) actual vs. expected * Figures in brackets represent 2005 assumptions Mortality: actual vs. expected

  46. For lump sum disability: Individual: 59% (73%) Group: 80% (80%) For income disability: Individual: 71% (43%) Group: 49% (81%) * Figures in brackets represent 2005 assumptions Morbidity: actual vs. expected

  47. Withdrawal Rates

  48. Assumed lapses per business class

  49. Assumed surrenders per business class

  50. Assumed lapses per industry

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