Overview of Experience for Longterm Insurers in SA 2006

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Overview of Experience for Long-term Insurers in
SA 2006
Hantie van Heerden Elash Mistry 14 Nov 2007
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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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What will we show you?

• 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

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Overview of the LT Insurance Market in 2006
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Overview rankings
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Overview by year-end
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Overview by license
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Overview per business class
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Overview growth by license
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Overview growth per business class
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Overview over time
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Overview key indicators
t typical l linked r reinsurer a
assistance n niche c captive
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Overview asset composition per industry
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Capital Adequacy Requirement (CAR)
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Distribution of CAR
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OCAR breakdown
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Management action over time
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Proportion of insurers that applymanagement
action
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Management action

• Examples of management actions used
• Reduce future bonuses
• Reduce/Remove non-vested bonuses
• Reduce bonus smoothing reserve
• Implement additional surrender charge

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Analysis of Surplus (AOS)
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Overview - AOS
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Profit as a of net written premium
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Expenses
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Split of expense losses
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Expense inflation assumption
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Actual expense inflation
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Initial per policy expense assumption
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Actual initial expense(individual business)
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Actual initial expense(individual business)
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Actual initial expense(individual business)
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Renewal per policy expense assumption
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Actual operating expense(individual business)
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Central Discount Rates
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Assumed central discount rate
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Observed investment yield
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Cumulative distribution of assumed real returns
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Mortality
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Mortality

• 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.

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Assurance mortality per industry
Male Smokers without AIDS loading
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Change in mortality for assured lives from 2005
to 2006
Smoker without AIDS loading
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AIDS loading comparison for 2005 and 2006
Mortality for Assured Lives Male Smoker
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AIDS loading by industry
Mortality for Assured Lives Male Smoker
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Annuitant mortality by industry
Male Smoker
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Change in mortality for annuitants from 2005 to
2006
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Mortality actual vs. expected

• 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

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Morbidity actual vs. expected

• 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

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Withdrawal Rates
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Assumed lapses per business class
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Assumed surrenders per business class
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Assumed lapses per industry
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Observed withdrawals per industry
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Thank you
Elash Mistry [phone] elashm_at_fsb.co.za
Hantie van Heerden [phone] hantiev_at_fsb.co
.za
www.fsb.co.za