2012 Student Research Conference:
25th Annual Student Research Conference

Introduction to Actuarial Valuations
Chisomo M. Sakala
Dr. Steven J. Smith, Faculty Mentor

Actuaries typically work for financial security systems such as individual insurance companies and employee benefits schemes. Performing actuarial valuations that determine pricing of products and reserving proper amounts of funds in order to meet future obligations are common functions for actuaries. In this monograph, pricing and reserving models are developed in the following generalized manner. First, a general model that applies to any individual insurance arrangement is developed. Then it is made more concrete by mathematically developing and employing the model in a traditional life insurance framework. Our results are two formulas: The first is for computing the lowest price an insurer can charge for insurance and on average expect to at least break even. The second is for determining the lowest amount of funds that an insurer must reserve in order to ensure that on average, they will at least have the capacity to settle all future benefit claims.

Keywords: Actuarial, Finance, Insurance, Present Value, Pricing, Reserving, Economic Indiferrence, Expected Value

Topic(s):Mathematics
Economics
Interdisciplinary

Presentation Type: Oral Paper

Session: 210-5
Location: VH 1228
Time: 10:30

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