Overview of Experience for Longterm insurers in SA 2005

1
Overview of Experience for Long-term insurers in
SA 2005

• Presented to ASSA members
• 14 November 2006 Cape Town
• 16 November 2006 Johannesburg

2
Why are we here?

• To provide information to practicing life
  actuaries on representative SA Statutory
  Valuation Method bases reported in 2005.

3
What will we show you?

• Brief overview of the LT Insurance market in
  2005.
• 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.

4
Overview of the LT Insurance market in 2005
5
Overview - some rankings
6
Overview - by year-end
7
Overview - by license
8
Overview - by business class
9
Overview - across time
10
Overview Spread of CAR cover
11
Overview Distribution of CAR
12
TCAR - Breakdown
13
OCAR - Breakdown
14
Overview - key indicators
15
Overview PH asset allocation
16
Overview SH asset allocation
17
Overview assets per industry
18
Overview - liabilities and CAR
23 ?
18 ?
19
Overview - AOS
20
Major Items in AOS
21
AOS Split
22
Release of Margins - AOS
23
Representative valuation basis - Expenses
24
Expenses - AOS
25
Expenses AOSTotal expense loss split
2004
2005
R000
26
Expenses AOSMax and Min per category
27
Expenses Expense inflation assumption
28
Expenses Actual expense inflation (individual
business)
8
20
3
79
29
Per policy recurring expense assumption-
Individual Business
30
Initial expense assumptionIndividual business
31
Actual initial expensesIndividual business per
industry
32
Actual initial expensesIndividual business per
class of business
33
Actual operating expensesIndividual business per
industry
34
Actual operating expensesIndividual business per
class of business
35
Representative valuation basis - Discount rates
36
Investment return - AOS
37
Discount rate assumedIndividual business
Central discount rate
38
Real ReturnCumulative Distribution of Assumed
Real Return
39
Investment yield observedIndividual
businessInvestment yield observed
40
Future bonus rates

• Vesting
• On sum assured
• Representative 3 for with-profit business
• Little spread for annuities and more for
  non-annuities
• On bonuses
• Representative 2 for annuities and 4 for
  non-annuities
• Greater spread for non-annuities
• Non-vesting
• Representative 5 with greatest spread

41
Representative valuation basis Mortality Rates
42
Mortality AOS results
43
Male Assurance Mortality with 1s confidence
intervals
44
Female Assurance Mortality with 1s confidence
intervals
45
Assurance Mortality without AIDS loading
46
Assurance Mortality with AIDS loading
47
Assurance Mortality AIDS loading
48
Annuity mortality
49
Actual Expected Mortality

• For assurance products
• Individual 79 (79) actual vs. expected
• Group 93 (97) actual vs. expected
• For annuity products
• Individual 114 (115) actual
• Group 93 (88) actual vs. expected

50
Representative valuation basis Morbidity Rates
51
Morbidity AOS results
52
Income disability morbidity
53
Lump sum morbidity without AIDS loading
54
Lump sum morbidity AIDS loading
55
Dread disease rates with AIDS loading
56
Actual Expected Morbidity

• For lump sum disability
• Individual 73 (70)
• Group 80 (80)
• For income disability
• Individual 43 (39)
• Group 81 (70)

57
Representative valuation basis - Withdrawal rates
58
Withdrawal rates - AOSIndividual business
59
Assumed lapse ratesIndividual business
60
Assumed surrender ratesIndividual business
61
Observed withdrawal ratesIndividual business
62
Observed withdrawal ratesGroup Business
63
Questions?
Thank you for your time
Contact details Hantie van Heerden (012) 422
2801 hantiev_at_fsb.co.za
Sias Esterhuizen [phone] siase_at_fsb.co.za