Capturing Actual Fund Movement Data

In order to prepare a model of UL or Accumulation Annuity policies for the Fund based approach to EBS, various types of Fund Movement information will likely have to be added to the database in addition to the Policy Movement Data required for both Traditional and Fund based approaches (see Capturing Actual Policy Movement Data).

Fund Movement data is necessary because the actuarial reserve for Fund based products makes explicit assumptions about the future growth in the policyholder fund, which determines projected future benefits, as well as the levels of future operating margins earned on the management of the fund.  As fund based products are flexible in structure, actual fund movement will seldom match the projected growth, and the reserve at the end of the period will reflect not only the new fund balance but also the new present value of future margins based on updated projections of the fund growth from that point forward.

Fund Movement data will help to identify the main causes of fund movement varying from expected as well as truing up the fund balance at the end of the period to match actual inforce data, thus allowing for a more informed analysis of the resulting earnings reported.  However, it will not likely be possible to model all the possible transactions impacting on the fund operation during the period, nor to match the fund balance very closely based only on captured seriatim fund movement transactions.  Accordingly, the Fund Movement data also includes tables which allow for future Fund balances by policy and Investment Account to be entered at one or more monthly reporting dates following the start of the EBS analysis period, as well as supplementary information regarding the Policyholder Values applicable at those dates.

Creating the Fund Movement Transactions Table

Create a new DataLink Table from the DataLink Table view list.  In the New DataLink Table wizard, select "Fund Movement Transactions" table as the table type, and the field to enter a name for the table will be disabled as the name is predefined.

The new table will have the following mandatory fields:

1.  Policy ID  -  must match the Policy ID's in the Policy Information table so that transactions can be associated with specific inforce or new business coverages.

2.  Transaction type  -  choose from the following options:

(0) - regular premium deposit
(1) - dump-in premium deposit
(2) - partial withdrawals

3.  Effective Date of transaction (year, month and day) - You may enter the exact day of the transaction but AXIS will treat the premium or withdrawal as occurring on the policy monthiversary falling in the same financial month.

4.  Account type - Choose one of:

(1) - Fund 1
(2) - Fund 2
(3) - Side Fund

(Note that to designate a specific Investment Account within the Account type, you may use the Investment Account optional field.)

5.  Amount - Enter the full amount paid or withdrawn, before charges.

This table will be loaded from a source file that you would normally obtain from the admin system.  Fund movement transactions are required for policies issued or terminated during the period as well as for policies inforce at the beginning of the period.

Each type of transaction intended to be exported to AXIS and used during EBS calculations, must be specifically enabled using the Transactions Tab of the Table editing dialogue for this table.  This allows you to selectively enable or disable a specific transaction type depending on whether you have data ready.  AXIS will assume no actual transactions during the EBS period other than those defined in this table, when a transaction type is enabled.  Otherwise the cell assumptions for that transaction will be used.  Take care to properly define the Status Date of this table which must match the status date of the Policy Movement Table.

You may also select and load optional fields to specify the exact Investment Account for the transaction and define the guaranteed crediting rate, bonus rate, benchmark rate and guarantee term of Guaranteed deposits.

Creating Future Fund Values Tables

Since the Fund Movement Transactions will not capture all the events impacting Fund Movement during a period, it will likely be necessary to true up the projected Fund Balance to reflect actual balances at the end of the EBS period, and possibly also at intervening month-ends, if the EBS projection period is longer than a month.  In UL applications this will require defining one or more Future Fund Values Tables to hold these balances.  (The comparable table in Accumulation Annuity applications is the Future Deposit Information table.)

To create a Future Fund Values Table for UL policies make a new DataLink Table from the DataLink Table view list.  In the New DataLink Table wizard, select "Future Fund Values" table as the table type, and enter a name for the table as you may have more than one and so the Table name is not predefined.  The name chosen should identify the inforce date of the data used to load it, which should also be reflected by the Status Date for this table after it is loaded.

The new table is similar in design and usage to the Current Fund Values table used to define the starting Fund balances (in the UL module), and so will have the following mandatory fields:

1.  Policy ID  -  must match the Policy ID's in the Policy Information table so that transactions can be associated with specific inforce or new business coverages.

2.  Account type - Choose one of:

(1) - Fund 1
(2) - Fund 2
(3) - Side Fund

(Note that to designate a specific Investment Account within the Account type, you may use the Investment Account optional field.)

3.  Current Value - Enter the full account value as at the status date. 

You may also select and load optional fields to specify the Investment Account name associated with each account value and to define Guaranteed deposit information including the deposit date, guaranteed crediting rate, bonus rate, benchmark rate and guarantee term.

Creating Future Policyholder Value Tables and Future Cashflow Allocation Tables

Future Fund Value (and Future Deposit Information) tables may well have multiple records per Policy ID and even multiple records per Investment Account per policy, corresponding to the various Fund Types and Investment Accounts within the total Policyholder Fund balance.  In order to provide additional information at each future fund adjustment date, you may wish to use Future Policyholder Value tables and Future Cashflow Allocation tables as well.

Future Policyholder Value Tables allow you to update policy level values necessary to correctly project the fund operation, agents compensation or Policyholder taxation.  Policy ID is the only mandatory field in these tables, and only one record per policy is expected.  Optional fields are available to update values such as Total Premiums paid to date, Accumulated Minimum premiums paid to Fund 1, and Adjusted Cost Base.  These fields correspond to optional fields with the same names in the Policy Information Table.

Future Cashflow Allocation Tables allow you to adjust the cashflow allocation rules applied to future premiums otherwise defined either in the Cell or by Current Cashflow Allocation Tables at the starting Inforce Date.   These tables have mandatory fields to define the Policy ID, Investment Account Name and Allocation percentage for multiple Investment Accounts and are used in the same way as the Current Cashflow Allocation tables.

Both Future Policyholder Value Tables and Future Cashflow Allocation Tables are created in the normal way from the DataLink Table view list, and individual names must be assigned since multiple copies are possible.

TIP:  While the Policy Information Table and Current Fund Values Table which define the starting inforce file for the EBS Analysis application will likely be based directly on the UL model originally used for the calculation of reported reserves at that date, the table definitions and source files used for Future Fund Values Policyholder Value Tables and Future Cashflow Allocation Table can likely be extracted from subsequent valuation models, with some minor modifications.