ALLEN BAILEY & ASSOCIATES, INC.
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Cash Flow Testing / Asset Adequacy analysis


The  primary purpose of CFT is to determine if reserves (and associated assets) are  adequate to fund the policy requirements under reasonable (but not all)  circumstances.   Below is an example of the actuarial work  we perform, and the output we  provide.  A testing date of 9/30 is frequently used.  This allows us to identify management  action that could offset any potential reserve adjustments prior to  year-end.   We generally are able to  use this analysis to support the Actuarial Opinion as of 12/31 with minimal  additional work.

Our Cash Flow Testing process includes the following activities: 
  • Build model  plans representing the majority of business, utilizing GGY AXIS Modeling  Software.           
  • Notional  allocation of assets to various lines of business as 
    appropriate.
  • Modeling of  both Schedule D (bonds & CMO’s) and Schedule B (mortgages)  assets   
  • Financial  asset and liability projections by line of business.
  • Development  of C-3 Phase I Cash Flow component for RBC purposes

A complete report summarizing the interest risk profile of your  business  and expected cash flows will be  provided:
  • Executive summary including summary results and any  recommendations resulting from a review of the  analysis.
  • Description  of scenarios and sensitivity tests.
  • Expected  cash flows and income for each line of business and in total under various scenarios.
  • Summary  of assumptions and descriptions of all model  plans.
  • 12/31 Opinion and Memorandum.

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​Our mission statement, "constantly pursuing expeditious perfection," goes to the heart of who we are. "               -Allen Bailey
  • Home
  • AB's Vision
  • About Us
  • The CAA - 2021 WP
  • Services
    • Actuarial >
      • Product Development
      • Cash Flow Testing
      • Financial Analysis
      • Mergers & Acquisitions
      • Financial Reporting
      • Experience Studies
      • Risk-Based Capital
      • Management Consulting
    • Software
    • Data Processing
    • Compliance
    • Fraternal Strategy
  • Our Team
  • Our Mission
  • Contact Us
  • AB White Paper 1