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Actuarial Reserves
In insurance, an actuarial reserve is a reserve set aside for future insurance liabilities. It is generally equal to the actuarial present value of the future cash flows of a contingent event. In the insurance context an actuarial reserve is the present value of the future cash flows of an insurance policy and the total liability of the insurer is the sum of the actuarial reserves for every individual policy. Regulated insurers are required to keep offsetting assets to pay off this future liability. The loss random variable The loss random variable is the starting point in the determination of any type of actuarial reserve calculation. Define K(x) to be the future state lifetime random variable of a person aged x. Then, for a death benefit of one dollar and premium P, the loss random variable, L, can be written in actuarial notation as a function of K(x) : L = v^ - P\ddot_ From this we can see that the present value of the loss to the insurance company now if the person dies i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Insurance
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier, or underwriter. A person or entity who buys insurance is known as a policyholder, while a person or entity covered under the policy is called an insured. The insurance transaction involves the policyholder assuming a guaranteed, known, and relatively small loss in the form of a payment to the insurer (a premium) in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms. Furthermore, it usually involves something in which the insured has an insurable interest established by o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Reserve (accounting)
In financial accounting, reserve always has a credit balance and can refer to a part of shareholders' equity, a liability for estimated claims, or contra-asset for uncollectible accounts. A reserve can appear in any part of shareholders' equity except for contributed or basic share capital. In nonprofit accounting, an "operating reserve" is the unrestricted cash on hand available to sustain an organization, and nonprofit boards usually specify a target of maintaining several months of operating cash or a percentage of their annual income, called an operating reserve ratio. Types of reserves in accounting treatment There are different types of reserves used in financial accounting, including capital reserves, revenue reserves, statutory reserves, realized reserves, unrealized reserves. Equity ''reserves'' are created from several possible sources: * Reserves created from shareholders' contributions, the most common examples of which are: ** ''legal reserve fund'' – it is requ ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Actuarial Present Value
The actuarial present value (APV) is the expected value of the present value of a contingent cash flow stream (i.e. a series of payments which may or may not be made). Actuarial present values are typically calculated for the benefit-payment or series of payments associated with life insurance and life annuities. The probability of a future payment is based on assumptions about the person's future mortality which is typically estimated using a life table. Life insurance Whole life insurance pays a pre-determined benefit either at or soon after the insured's death. The symbol ''(x)'' is used to denote "a life aged ''x''" where ''x'' is a non-random parameter that is assumed to be greater than zero. The actuarial present value of one unit of whole life insurance issued to ''(x)'' is denoted by the symbol \,A_x or \,\overline_x in actuarial notation. Let ''G>0'' (the "age at death") be the random variable that models the age at which an individual, such as ''(x)'', will die. And le ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Random Variable
A random variable (also called random quantity, aleatory variable, or stochastic variable) is a Mathematics, mathematical formalization of a quantity or object which depends on randomness, random events. The term 'random variable' in its mathematical definition refers to neither randomness nor variability but instead is a mathematical function (mathematics), function in which * the Domain of a function, domain is the set of possible Outcome (probability), outcomes in a sample space (e.g. the set \ which are the possible upper sides of a flipped coin heads H or tails T as the result from tossing a coin); and * the Range of a function, range is a measurable space (e.g. corresponding to the domain above, the range might be the set \ if say heads H mapped to -1 and T mapped to 1). Typically, the range of a random variable is a subset of the Real number, real numbers. Informally, randomness typically represents some fundamental element of chance, such as in the roll of a dice, d ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Actuarial Notation
Actuarial notation is a shorthand method to allow actuaries to record mathematical formulas that deal with interest rates and life tables. Traditional notation uses a halo system, where symbols are placed as superscript or subscript before or after the main letter. Example notation using the halo system can be seen to the right. Various proposals have been made to adopt a linear system, where all the notation would be on a single line without the use of superscripts or subscripts. Such a method would be useful for computing where representation of the halo system can be extremely difficult. However, a standard linear system has yet to emerge. Example notation Interest rates \,i is the annual effective interest rate, which is the "true" rate of interest over ''a year''. Thus if the annual interest rate is 12% then \,i = 0.12. \,i^ (pronounced "i ''upper'' m") is the nominal interest rate convertible m times a year, and is numerically equal to m times the effective rate of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Generally Accepted Accounting Principles (USA)
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC), and is the default accounting standard used by companies based in the United States. The Financial Accounting Standards Board (FASB) publishes and maintains the Accounting Standards Codification (ASC), which is the single source of authoritative nongovernmental U.S. GAAP. The FASB published U.S. GAAP in Extensible Business Reporting Language (XBRL) beginning in 2008. Sources The FASB Accounting Standards Codification is the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. In addition to the SEC's rules and interpretive releases, the SEC staff issues Staff Accounting Bulletins that represent practices followed by the staff in administering SEC disclosure re ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Statutory Reserve
In the business of insurance, statutory reserves are those assets an insurance company is legally required to maintain on its balance sheet with respect to the unmatured obligations (i.e., expected future claims) of the company. Statutory reserves are a type of actuarial reserve. Purpose Statutory reserves are intended to ensure that insurance companies are able to meet future obligations created by insurance policies. These reserves must be reported in statements filed with insurance regulatory bodies. They are calculated with a certain level of conservatism in order to protect policyholders and beneficiaries. Methods There are two types of methods for calculation of statutory reserves. Reserve methodology may be fully prescribed by law, which is often called formula-based reserving. This is in contrast to principles-based reserves, where actuaries are given latitude to use professional judgement in determining methodology and assumptions for reserve calculation. In the United Sta ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Actuarial Science
Actuarial science is the discipline that applies mathematics, mathematical and statistics, statistical methods to Risk assessment, assess risk in insurance, pension, finance, investment and other industries and professions. Actuary, Actuaries are professionals trained in this discipline. In many countries, actuaries must demonstrate their competence by passing a series of rigorous professional examinations focused in fields such as probability and predictive analysis. Actuarial science includes a number of interrelated subjects, including mathematics, probability theory, statistics, finance, economics, financial accounting and computer science. Historically, actuarial science used deterministic models in the construction of tables and premiums. The science has gone through revolutionary changes since the 1980s due to the proliferation of high speed computers and the union of stochastic actuarial models with modern financial theory. Many universities have undergraduate and gradu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Actuary
An actuary is a professional with advanced mathematical skills who deals with the measurement and management of risk and uncertainty. These risks can affect both sides of the balance sheet and require investment management, asset management, liability (financial accounting), liability management, and valuation skills. Actuaries provide assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms. The name of the corresponding academic discipline is actuarial science. While the concept of insurance dates to antiquity, the concepts needed to scientifically measure and mitigate risks have their origins in 17th-century studies of probability and annuities. Actuaries in the 21st century require analytical skills, business knowledge, and an understanding of human behavior and information systems; actuaries use this knowledge to design programs that manage risk, by determining if the implementation of strategies proposed for mit ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Force Of Mortality
In actuarial science, force of mortality represents the instantaneous rate of mortality at a certain age measured on an annualized basis. It is identical in concept to failure rate, also called hazard function, in reliability theory. Motivation and definition In a life table, we consider the probability of a person dying from age ''x'' to ''x'' + 1, called ''q''''x''. In the continuous case, we could also consider the conditional probability of a person who has attained age (''x'') dying between ages ''x'' and ''x'' + ''Δx'', which is :P_(\Delta x)=P(x |
Life Insurance
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ... between an insurance policy holder and an insurance , insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policyholder typically pays a premium, either regularly or as one lump sum. The benefits may include other expenses, such as funeral expenses. Life policies are legal contracts and the terms of each contract describe the limitations of the insured events. Often, specific exclusions written into the contract limit the liability of the insurer; c ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
