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Experience  studies


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A key component of our practice includes the  development of various experience studies for our clients.   These studies are used for cash flow testing, new product development,  product management and as a general management tool.   For some clients we complete detail analysis or at least update these  studies annually as part of the cash flow testing cycle.  “Experience studies” is a broad term and includes the following:


Expense

Expense studies are of particular value to our  clients.  This type of  study  analyzes all expense elements of the company and develops  appropriate unit  expense factors on both a marginal and fully allocated  basis.   As a part of the study we are able to complete “what-if”  scenarios  related to levels of new business and the impact on the unit  factors and  ultimately the efficiency of the underwriting and issue  departments.

The objective of this study is two-fold:   First is to develop the actual per unit, per policy and percent of  premium expenses actually incurred for each line of business.   The second  goal is to put in place a template so that it can be updated periodically to track emerging unit expenses.

Our  goal is to provide unit expense factors for each  of the various functions  (such as sales, policy issue, underwriting, etc.) that  can be used not  only for development or enhancement of existing products in your portfolio, but  that can also be used in the financial reporting process.  The results of  this study will be  available for cash flow testing, expense allocations to  be used in financial  reporting, illustration actuary work, overall  tracking of expenses and  management thereof, as well as for determining  profitability by line of  business.

Mortality & Lapse

Mortality studies identify how the mortality  experience of the company is  emerging relative to what was assumed in the  development of the  products. The  results of this study along with the trends identified  by updating this type of  study regularly will allow for more accurate  product pricing, better financial  representation in the cash flow testing,  etc.

Lapse studies are similar to mortality studies.   We  review the lapse / surrender  experience of the company relative to pricing. In addition, when completing this study  we are able to identify producers that have more or less favorable experience  than  expected.
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Our mission statement, "constantly pursuing expeditious perfection," goes to the heart of who we are.                -Allen Bailey