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SOA北美精算师历届真题汇总November2002Course8I（四）

来源：高顿网校 2014-08-20

　　高顿网校小编提醒您，我们一定会努力做到*4，SOA北美精算师历届真题汇总November2002Course8I（四），请收好了，真心重要哦。
　　13. (14 points) The CEO of Saturn Life proposes to develop and market a dividend paying

　　participating Universal Life (par UL) product to compete with Mercury Life’s

　　participating Whole Life product, the leading product in the market. The CEO forecasts

　　$50 million of first year premium from sales during the first twelve months. Cost of

　　insurance rates, expense loads, and the interest crediting rate are fixed and guaranteed by

　　the terms of the contract.

　　(a) (1 point) List the risks, according to Kotler’s Marketing Management, to the

　　successful development of a new product and assess Saturn’s par UL product

　　proposal with respect to each of these risks.

　　(b) (3 points) Describe objectives and issues for establishing a financial structure for

　　dividends.

　　(c) (1 point) Explain considerations Saturn Life needs to make in selling

　　participating policies as a stock company.

　　(d) (7 points) Saturn Life uses US GAAP for its management accounting basis.

　　For the first year policy projection you are given:

　　Solvency Based Income Statement

　　(in thousands) Solvency Based Balance

　　Sheet (in thousands)

　　Premium $50,000 Assets $19,250

　　Investment Income 228

　　Reserve 17,500

　　Death Benefits 5,000 Required Capital 1,750

　　Surrenders 308

　　Reserve Increase 17,500

　　Commissions 45,000

　　Fixed Expenses

　　1,750

　　Net Income (19,330)

　　Dividend 0

　　Income-Based Information (in thousands)

　　Benefit Reserve $29,368

　　Initial DAC $43,000

　　DAC Amortization Factor 50%

　　DAC Interest Rate 4%

　　COURSE 8I: Fall 2002 - 12 - GO ON TO NEXT PAGE

　　Individual Insurance

　　Afternoon Session

　　13. Continued

　　Policy information

　　Interested Credited in First Year $1.2 million

　　Cost of Insurance 36.95% of premium

　　Surrender Charge 2.475% of premium

　　Expense Loads 3% of premium

　　Initial Death Benefit $500,000 per policy

　　Number of Policies 5,000

　　Annual Lapse Rate 5%

　　Assume:

　　? No taxes.

　　? Deaths occur prior to lapses.

　　? Lapses occur at end of policy year.

　　? Policies are all equal size.

　　? No dividends are paid in year 1.

　　? ROE is based on end of year US GAAP Equity.

　　? The ROE is the same for all years.

　　? The Statutory ROI is equal to the ROE.

　　(i) Describe the appropriate SFAS accounting treatment of this product

　　design.

　　(ii) Calculate the end of first year DAC balance and construct the first year

　　management basis income statement and balance sheet. Show all work.

　　(iii) Calculate the first year ROE and evaluate whether the ROE would be

　　acceptable to Saturn Life. Justify your assumptions and show all work.

　　(e) (2 points) Recommend a course of action for the development of the product.

　　Justify your response.

　　COURSE 8I: Fall 2002 - 13 - GO ON TO NEXT PAGE

　　Individual Insurance

　　Afternoon Session

　　14. (6 points)

　　(a) (2 points) Describe and evaluate the following price setting methods:

　　? Markup Pricing

　　? Target Return Pricing

　　? Perceived Value Pricing

　　? Value Pricing

　　? Going-Rate Pricing

　　(b) (3 points) You have been asked to price a direct-marketed 1-year level term

　　product.

　　You are given the following initial estimates of the product’s costs:

　　Underwriting expenses per thousand of face amount issued $20

　　Total administrative costs $20,000

　　Mortality cost per thousand of face amount issued $4

　　Capital requirement $27,300

　　Average size $5,000

　　Expected sales 1,000 policies

　　Desired return 9.15%

　　Determine the difference between the break-even volume using:

　　(i) the Markup Pricing method; and

　　(ii) the Target Return Pricing method.

　　Show all work.

　　(c) (1 point) Your primary competitor is currently the market leader and has high

　　brand awareness. However, its ratings are not as high as yours. You are targeting

　　your premiums to be lower than theirs. Describe the possible reactions the

　　competitor will have to your new product.

　　COURSE 8I: Fall 2002 - 14 - GO ON TO NEXT PAGE

　　Individual Insurance

　　Afternoon Session
　　为了一个伟大的神圣目的，去千方百计、历尽艰辛地奋斗，是完全值得的。——高顿网校金玉良言

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