SOA真题November2004Course8IC

文章作者 100test 发表时间 2007:02:05 16:09:37
来源 100Test.Com百考试题网


COURSE 8I: Fall 2004 -1- GO ON TO NEXT PAGE
Individual Insurance – Canada
Morning Session
**BEGINNING OF EXAMINATION 8**
INDIVIDUAL INSURANCE – CANADA
MORNING SESSION
1. (5 points) ABC Life has a career agency distribution system. ABC’s management is
reviewing their financing plan for new agents.
(a) Describe the different types of financing plans for new agents and explain the
advantages and disadvantages of each according to LIMRA.
(b) You are given the following information:
Year Average
Annualized First
Year Premium
Agent
Termination
Rate
Subsidy Validation
Schedule
Commission
1 $60,000 50% 120% $20,000
2 $80,000 25% 80% $25,000
3 $100,000 10% 40% $30,000
4 $120,000 0% 0% $0
•. Commissions are paid on annualized first year premium.
•. Agent termination occurs at the end of the year.
•. 6% of first year premium is priced into products to cover agent financing.
•. The interest rate is 0%.
(i) Calculate the average financing cost for a new agent as a percentage of
first year premium for each of the first three years. Show all work.
(ii) Determine the number of years it will take for ABC to recover the
financing costs on 100 new agents. Show all work.
COURSE 8I: Fall 2004 -2- GO ON TO NEXT PAGE
Individual Insurance – Canada
Morning Session
2. (11 points) XYZ Life is evaluating a block of identical special life contingent annuities
issued January 1, 2004 by ABC Life. You are given:
•. Total required capital as a percentage of solvency reserves is 5%.
•. Assumed investment interest rate on required capital is 4%.
•. Hurdle rate is 15%.
•. Each annuity payment is $71,280.
•. Payments are made at the end of each year during the annuitant’s lifetime.
•. Deaths occur at the end of the year before the annuity payment.
•. No taxes or maintenance expenses.
Actual Projected
1/1/2004 12/31/2004 12/31/2005 12/31/2006
Policy count 100 75 50 25
Solvency reserves (‘000s) $9,864 $5,011 $1,697 $0
Premium (‘000s) $10,000 $0 $0 $0
Commission (‘000s) $400 $0 $0 $0
Benefits (‘000s) $0 $5,346 $3,564 $1,782
Investment income on
solvency reserves and
cashflows (‘000s)
$0 $838 $426 $144
(a) (3 points) With respect to Minimum Continuing Capital &. Surplus Requirements
for Life Insurance companies and each of the following risks:
•. Mortality
•. Pricing interest margin
•. Change in the interest rate environment.
(i) Describe the nature of the risks.
(ii) Calculate the minimum capital requirement at December 31, 2004 for the
risks. Show all work.
(b) (4 points) Calculate the embedded value of this block at January 1, 2004. Show
all work.
COURSE 8I: Fall 2004 -3- GO ON TO NEXT PAGE
Individual Insurance – Canada
Morning Session
2. (Continued)
(c) (3 points) You are given the following binomial distribution:
n q f(25) F(25)
100 0.25 0.0918 0.5525
Calculate the probability of solvency earnings exceeding $250,000 in 2004.
Show all work.
(d) (1 point) On January 1, 2005, XYZ Life buys the remaining block of 75
contracts.
Calculate the maximum amount of assets ABC transfers to XYZ assuming no
transaction expenses. Show all work.
COURSE 8I: Fall 2004 -4- GO ON TO NEXT PAGE
Individual Insurance – Canada
Morning Session

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