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Jul 19, 2023 · The accounting and financial reporting guidance for certain long-duration insurance and annuity contracts is codified in Accounting Standards Codification (ASC) 944, Financial Services — Insurance. Our publication will help you understand the accounting and financial reporting requirements for certain long-duration insurance and annuity ...
Apr 28, 2023 · The excess of this payout over the amount recorded as an asset is reported as income, while the life insurance asset is removed from the balance sheet. For example, a company takes out a half million-dollar life insurance policy on its founder, where the initial annual payment is for $16,000. Of that amount, $6,000 is recorded as a cash ...
A Failure-Rate Curve is a crucial concept used in various fields to understand the rate at which systems, components, or entities fail over time. This article explores what Failure-Rate Curves represent, provides examples to illustrate their application in different contexts, discusses their significance in risk management and decision-making, and explains how they are interpreted and […]
- Implementation
- Model Selection
- The Shrinkage Factor \
- Interactions
- Comparison and Sensitivity Analysis
The implementation uses the R interface for h2o, see LeDell et al. . Note that the R package smurf, see Reynkens et al. , which is based on the analysis of Devriendt et al. already introduces different regularisation types within a Lasso setting (SMURF algorithm). However, it does not contain the trend filtering, so that we ended up developing a ...
We apply the different versions of the Lasso to model the lapse rates of a European insurance portfolio, see Sect. 2. For each covariate, one of the regularisation types regular Lasso, fused Lasso or trend filtering needs to be specified. There are some recommendations for the choice of the regularisation type but no strict rules. For example, bina...
As explained in Sect. 3.2, the shrinkage factor \(\lambda\) significantly changes the result of the model, where an optimal value can be estimated by cross-validation. We want to visualise this effect with Fig. 5, where results of four different values of \(\lambda\) (very high—high—optimal—low) are shown for the covariate contract duration. The pa...
So far we have not included any interaction terms, leading to a model with one estimated coefficient for each category level of each covariate. But what if the lapse rate for one category level depends on the category level of another covariate? This appears to be the case for the covariates country and contract duration. The top panel of Fig. 7 sh...
In order to quantitatively assess and compare the different models, we first implement an intercept only model as a baseline. As the name suggests, the intercept only model consists of the intercept but no other covariates. Essentially, the predicted lapse rate for each observation is just the average lapse rate of the portfolio. Several modelling ...
Sep 7, 2015 · An insurer wants to renew as many policies as possible. The more renewals, the lower their operating costs and the higher their earnings will be. So let’s say that an insurer has 10,000 policy holders and that 3200 of these are renewed. The lapse ratio here is 68%, (10000-3200)/ (10000) x 100, which may or may not be acceptable.
Jul 21, 2021 · Key Takeaways. A lapse ratio measures the percentage of an insurance company’s policies that have not been renewed by customers. A lapse ratio reveals how efficient a company is at retaining its ...
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Aug 27, 2023 · The ultimate losses can be calculated as the earned premium multiplied by the expected loss ratio. The total reserve is calculated as the ultimate losses less paid losses. The IBNR reserve is ...
