1. You are a senior actuary working for Beta. 3 life insurance company writing a range of protection and savings policies. A student actuary working on your team has presented you with the following data relating to a cohort of 50 identical 25-year conventional without-prots Endowment Assurance policies. all maturing in exactly ve years' time: Current age of policyholders: 55 exact Sum Assured: 100,000 per policy. payable at maturity. or at the end of the year of death. if earlier Mortality: 80% cf AMEIE Ultimate Premium: 1,200 per annum, received in advance at the beginning of each year, next premiums due in exactly one year's time Your Chief Actuary has asked you to calculate the best-estimate reserves that would be required to be held for this oohort. allowing for the investment return earned on the reserves held. For the purpose of this calculation, you will use an investment return that is unique to you. The return you will use will he: 4.sbod%. where a.b.c and d are the last four digits of your Examination Number. So. for example, if your Examination Number is 123456. then you should use an investment return of 4.341516%; if your Examination Number is 987654, then you should use an investment return of 4.7654%. For the purposes of oaloulating the best-estimate reserves. you should: - Ignore the impact of expenses and charges - Assume that early surrenders are not permitted - Assume that any death benets arising in previous periods have been paid e) Explain clearly.' what would happen to the size of the bestestimate reserve calculated at time t = o in each of the following cincur'nstahces: i} The sum assured is paid out at the date of death, instead of the end of the policy year; ii} The mortalityr of the policyholders is soils of wuss Select: iii) Policvholders are allowed to surrender their policy before the end of the contest. Note: you should consider each circumstance in isolation. f) Discuss the factors that Beta should consider when setting the investment return assumption used to calculate the best-estimate reserves. 9] Explain brieyr why. in practice Beta will need to hold a higher level of capital for this business then the best-estimate reserve