Insurance Revenue Account & Profit Modelling (Part B) is the extension of intermediate level course Insurance Revenue Account & Profit Modelling (under “Cash Flow Modelling on Spreadsheet” series), which aims to provide more in-depth understanding on how we can model insurance cash flows on spreadsheets – particularly commission, expenses, reserves, taxation and profits.
This course is only eligible for Course Participants who have attended and completed Insurance Revenue Account & Profit Modelling Course.
Course Level: Intermediate
Target Audience: New actuarial entries / Junior & senior actuarial executives (1-3 years of experience) / Actuarial valuation team / Actuarial pricing team
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Course Outlines
Chapter 1: How to How to Populate Cash Flows to Revenue Account?
This Chapter starts with recapping insurance cash flows learned from the previous course and populate them into insurance revenue account format. By populating cash flows, Course Participants identify items how the unique element in insurance revenue account, namely increase in reserves, plays an important role in determining profits.
In addition, Course Participants learn to calculate net profit after corporate tax and its APV, which serves as an important element in Embedded Value (“EV”) calculations .
Chapter 2: How to Manage Actuarial Reserves?
This Chapter recaps the fundamental concepts of how actuarial reserves manage the timing mismatches between premium and benefit outgo. By observing the movement of reserves throughout the policy term of a given product, Course Participants learns how the deviations in actual policy experience affect sustainability of an insurance products.
Under this Chapter, Course Participants learns to calculate reserves using two common methods, namely unearned premium reserves (“UPR”) and gross premium valuation (“GPV”). UPR is commonly used for short term products, whereas GPV is used for long term products which we need to consider the effects of time value of money.
Chapter 3: How to Construct Revenue Account for a Portfolio?
In the last chapter of this Course, Course Participants learns to construct insurance revenue account by calendar years, for a portfolio of policies. This portfolio comprises one or more insurance products, which may be set in force at different points of time.
Through exercises created under this chapter, Course Participants have a closer look on how actual insurance revenue accounts works, as well as preparing themselves to the advanced course (which perform cash flow modelling on monthly basis, by calendar date).
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