Risk analysis.

(7 points) You are an Actuarial Analyst at AHA assigned to review the Sartori Insurance Company (Sartori) Group Long-Term Disability (LTD) block of business. Refer to Section 4.17 of the Case Study. Three years ago Sartori started its LTD business by selling to employer groups ("Groups") that provide free LTD to their employees. At that time Sartori priced new sales based on 10 years of its own employees' experience. In order to incent new sales Sartori offered new employer groups a 3-year rate guarantee and has continued to do so up to the present. The Groups that Sartori sold to three years ago are eligible for a rate increase this year. These Groups represent 50% of the entire block of business. (a) (3 points) (1) Describe three key risks applicable to Group LTD in general. (ii) Assess AHA's exposure to each of the risks you identified in (1). You are reviewing employer group A's ("Group A") actual disability recovery rates. The following chart reflects the actual to expected recovery rates for Group A's experience compared to initial pricing Ages Months