Calculate and interpret profit signature, profit vector, net present value, internal rate of return, profit margin, and discounted payback period for long-term life and health insurance, and annuity contracts.
Free SOA Exam ALTAM (Advanced Long-Term Actuarial Mathematics) lesson in Profit Analysis. 77 min read, ~11,582 words.
Profit vector is end-of-year cash per policy in force at start of year. Profit signature is per policy issued. NPV discounts at the risk discount rate. Accept when NPV 0. IRR solves. Accept when IRR exceeds the hurdle. Profit margin = NPV รท EPV(gross premiums), both at the same hurdle...
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Example 5
- Example 6
- Example 7
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- 4c
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