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 *uate 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 *uate 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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