Would anyone please provide workings for Inv Income on page 143 of the 'subjectst32005-2009.pdf' exam paper pack downloaded from the actuarial profession website? I did not quite understand - 'Investment Return is taken as the average UPR b/fwd + Claim Reserve b/fwd + ½ of cash flow times the annual investment return of 4.5% where cash flow is NWP less paid claims less expenses, or other reasonable formula' in the examiners' report. Thank you! Yan Yan
Let's take both contracts A+B, for 2005 as an example: UPR b/f = 8910.9 Claims reserve b/f=2760.5 NWP-paid claims-expenses paid = 31124.5-10205.3-14895.4=6023.8 Hence cashflow/2 = 6023.8/2=3011.9 Hence, UPR b/f + claims reserve b/f + average cashflow = 14683.3 Hence, invt return = 14683.3 x 4.5% = 660.7. (The word "average" in the examiners' report is misleading in my opinion. I think they mean the mid-year cashflow.)
