Actuarial Case

• The reserving process happened after a policy is sold
• It is calculating how much money we need to hold in order to be able to pay off our liabilities in the future,
• As a insurance company – the reserve is a huge portion of insurance company balance sheet, and is very important because how much reserve we hold has a large impact on the company’s income
• Holding too much is not good for our income, holding too low and we risk not having enough to pay policyholders

The role of us in calculating the reserve is to make sure the methodology is correct and all risks are accounted for, fits with regulations

• Actuarial reserve is calculated on a similar idea, based on previous experience to determine how much money to set aside
• First thing is to obtain the policy information we need, policy holder information, and product information
• Then to determine how we project the liabilities, we need to use assumptions such as mortality rate, interest rate…etc, this information usually comes from our past experiences
• Afterwards we need to use these information to project future cashflows, at John Hancock this is usually done through modeling in AXIS

At John Hancock, most of the calculations for reserves are done in GGY AXIS

• Policy information, such as details of the product, and actuarial assumptions are input and out comes the reserve numbers
• We do this for 4 accounting basis, each one follows different calculation methodologies
• An actuaries job is to review the numbers coming out of AXIS to see if they are reasonable, and book the reserves for the company