EBS Overview

The Earnings by Source modules of AXIS are separately licensed enhancements to each of the liability modules that support the analysis of projected and actual earnings by the major sources of profit (also called Gain and Loss analysis). The features also enable the creation of various movement analysis reports (policy count, reserves, etc.) again on a planned or actual basis, and the preparation of flexible experience analysis reports that compare actual to expected movements by number or amount, or calculate average rates of actual to exposed experience.

The two different approaches to EBS now cover all 5 liability modules of AXIS: the Traditional EBS Report format, which is applicable to traditional products modelled in the Regular, Par, Disability and Payout annuity modules, and the Fund based EBS Report which is applicable to flexible Fund based products modelled in the UL module and the accumulation phase within the Annuity module.

EBS functionality is based on the following key elements for all supported modules of AXIS:

1. the analysis of the change in reserves into detailed components, including the release of each PFAD component period by period;
2. the ability to capture actual policy terminations by death, lapse, disability incurral or other benefit, on a seriatim basis in DataLink and to associate these actual transactions with a seriatim file of inforce and new business records;
3. the ability to define a separate "reporting date" with each termination and new business transaction, and thus reconcile reserve movement and earnings based on actual reported transactions in any given period;
4. the option to substitute actual terminations from this transaction file for the corresponding expected rates of terminations when calculating projected earnings for a block of business, and to control the inclusion of these transactions according to reporting date;
5. a detailed set of basic EBS report lines to support a user-definable analysis of earnings by source within the existing calendar year projections custom report framework, plus vendor-supplied sample reports for both EBS and RMA purposes.

For Fund based EBS Reporting, the elements described were further enhanced by adding:

1. a refinement to the analysis of change in reserves to separate out the reconciliation of the policyholder Fund from the discounted present value of future profit, which is primarily composed of future margins in the various Fund components;
2. the ability to capture additional inforce and transaction data related to the movement in the policyholder Fund;
3. additional calculated Report lines and CY Row formula lines necessary to support the alternative Vendor Defined Fund based EBS Report.

At this point, there is no ability to incorporate actual investment income, actual commissions, expenses and taxes or other actual items of income and outgo, except by modifying the Pricing assumptions within AXIS cells. Thus, initially, it is expected that the EBS reports generated by AXIS will normally be augmented and consolidated with other accounting data outside of AXIS.

In the Par Module, the Reserve Approach set must be consistent with the option selected for the application of dividends. Furthermore, the analysis of historical earnings requires that both inforce and transaction data be defined on a seriatim basis. The application of EBS analysis to projected future earnings, beyond the historical transaction period is fully supported in all modules except Disability.

Note that the licensing and use of DataLink is a prerequisite for the capturing and analysis of actual transactions for EBS purposes, and that separate licensing of EBS functionality is offered on a module-by-module basis. The EBS Module is currently offered for the Regular Life, Participating, UL, Disability and Annuity (both payout and accumulation phase products) modules for Canadian PPM, for the Regular Life and Disability modules for US GAAP and for the Disability module for various Net Level Premium methods.

Contact GGY for further information or to discuss licensing and the option to test the EBS features for specific liability modules.