...Annuities, Sinking Funds, and Amortization Math Analysis and Discrete Math – Sections 5.3 and 5.4 I. Warm-Up Problem Previously, we have computed the future value of an investment when a fixed amount of money is deposited in an account that pays interest compounded periodically. Often, however, people do not deposit money and then sit back and watch it grow. Rather, money is invested in small amounts at periodic intervals. Consider these problems: 1. Chrissy deposits $200 each year into a savings account that has an annual interest rate of 8% compounded annually. How much money will Chrissy have in her account after three years? Hint: Make up a table of how much she has in her account by year. 2. Ben saves $50 per month in a credit union that has an annual interest rate of 6% compounded monthly. How much money will Ben have in his account after he has made six deposits? Page 1 of 7 II. Generalization Let's generalize the situation. Suppose we deposit P dollars each payment period for n payment periods at rate of interest i per payment period. a. Consider the first deposit only. During how many payment periods does interest get applied to this investment? ____________ Using the compound interest formula, how much is this part of the investment worth? Call this quantity A1. __________________________ b. Consider the second deposit only. During how many payment periods does interest get applied to this investment? ____________ Using the compound interest formula, how much is...
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...3. Gibson • Calculate the unit support cost per policy for new and in-force annuity and life insurance policies using the new allocation bases. In addition, calculate the total support costs to be reported by product for each legal entity. • Why would Hampton want to track that information by product even if that level of detail was not required by regulators? • Will the new support cost allocation information help Gibson Insurance establish better pricing guidelines for the various annuities and life insurance products sold by each legal business unite entity? Why or why not? • Is the room for improvement in the means by which the corporate support costs are allocated under Hampton’s new approach? If yes, in what way(s)? If no, why not? 4. Citibank • Why has Citibank introduced a Performance Scorecard? • What is the “business model” underlying the performance scorecard? • What are the strengths and weaknesses of customer satisfaction as a performance measure in this case? In general? • Assume that you are Lisa Johnson. Complete Exhibit 1 to evaluate James’ performance. • Should James get the full bonus? Explain.3. Gibson • Calculate the unit support cost per policy for new and in-force annuity and life insurance policies using the new allocation bases. In addition, calculate the total support costs to be reported by product for each legal entity. • Why would Hampton want to track that information by product even if that level of detail was not required by regulators...
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...Managerial Appls of Info Tech Table of Contents 1. Business problem statement 2. Company background 3. Discussion of business issues 4. Benefits of solving the problem 5. Business/technical approach 6. High level solution 7. References 1. Business problem statement Their mission is to provide financial security and insurance products and has a very important purpose, annuity and investment services for insurance products. Also to provide incentives for families and business owners to reach agreement to set appointments for financial services and several charities that with being a resource center of influence, and investigative units around them. 2. Company background Established in 1845 and located in New York, New York Life Insurance Company is a Fortune 100 company and is the oldest and one of the largest mutual life insurance companies in America. The New York Life maintains operations in all 50 states and many markets in Asia and Latin America. The Company holds the highest rating for financial strength from four major players in the industry life insurance rating. In 2010, New York Life Insurance Company posted record sales in the U.S. individual life insurance, an increase of 39% 1 in 2009 and far above the industry growth of 12% in 2010.2. The New York Life offers a large staff of experts to support all products and give them to personnel training for their first 36 months to guarantee they are fully informed of any decision...
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...Current Events in Business Research Isaida Perez RES/351 December 15, 2013 Marcel Nzeukou In this paper I will discuss the business research process regarding the company I work for Aetna Inc., a health insurance company. I’ve been working in the health insurance field for some time now, and I find it rewarding being able to assist my clients with their health insurance claims. I will summarize the research process within Aetna and how that process applies to its daily functions. The business research process usually beings by looking at the market and/or industry. The reason this is done is to determine if whether or not there is an opportunity for business to be establish within a target market. Aetna was established in 1850 as “an Annuity Fund to sell life insurance” (Aetna, Inc.), established out of Hartford, Connecticut they were one the first insurance companies in the area. In those times there was an obvious need for insurance companies, and there were relatively few established health insurance companies. Since that time Aetna has committed itself to providing access to cost-effective health care of the highest standards. They strive to protect their clients against health-related risks and help them achieve both good health and financial security. Business research as defined by Cooper & Schindler,” is a systematic inquiry that provides information to guide managerial decisions”. This definition can be applied to Aetna Inc., as business decisions must be made...
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...Business source complete Great Eastern Life Assurance this week became the first Asian insurance company outside Australia or Japan to sell a subordinated bond. The Singaporean borrower raised S$400m ($310.5m) in a deal that bankers hope will encourage regulators across Asia to let insurers turn to the debt markets to shore up their capital positions. Singapore is rare among Asian countries in having explicit capital regulations for insurance companies that allow the use of various forms of debt, as well as equities, to function as capital. But no issuer had tested the regulations before, and the lead managers held long discussions with the Monetary Authority of Singapore while they were structuring the deal. One of the points under discussion was whether the coupons needed to be deferrable -- something that would strengthen the bond's function as capital, but would have made the deal a tougher sell to investors. "It was more investor friendly to make coupons non-deferrable and we had to debate that point a bit with the MAS," Tony Cheong, group chief financial officer at Great Eastern Life Assurance told EuroWeek Asia. "But this is a common structure for banks. You will likely see the capital requirements of banks and insurance companies move closer and closer together, so it made sense." The issuer and its bankers won that argument, allowing Great Eastern to sell a S$400m 15 year non-call 10 bond with non-deferrable coupons. The bond got around S$1.2bn of demand, allowing...
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...6. PMT= $73000 N= 8 years i= 8.5%= 0.085 We know that annuity formula for PV PV=PMT [1-(1+i)-n/i] = 73000[1-(1+0.085)-8/0.085] = $411660.35 Ans 7. PMT= $4000, n= 20 years, i= 11.2% We know that FV= PMT [(1+i)n-1/i]= 4000[(1+0.112)20-1/0.112] = $262781.16 Ans For n= 40 years FV= 4000[(1+0.112)40-1/0.112] = $2459072.63 Ans 8. FV= 90000, n= 10 years, i= 6.8% PMT=? We know that PMT= FV *i/(1+i)n-1 = 90000*0.068/(1+0.068)10-1 = $6575.83 Ans 9. PV=$50,000, n= 7years, i= 7.5% PMT=? PMT= PV*i/1-(1+i)-n = 50000*0.075/1-(1+0.075)-7 = $9440.016 Ans 10. Payment= 1059 We know that r= (1+0.05/12)3-1= 0.1255 = 1.26% According the question, we have total six years and we divide in 24 quarters So, we know formula for present value of an annuity PV=C [1-{1/ (1+r) T}]/r = 1059[1-{1/(1+0.0126)24}]/0.0126 = $21816.5 So, total PV annuity= 21816.5*(1+0.0126) = $22091.39 Ans 11. C= $25,000, r= 0.072, We know that formula PV=C/r = 25000/0.072 = 347222.2 Ans 12. PV= $375000, C= $25000 We know...
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...ACTL1001 Final Exam Duration: 2 Hours Weighting: 55% Total marks: 100 Marks 4 Questions (All of different weighting) 1. Life Insurance (31%) Pricing calculations (toughest calculations in the paper!) Explanation and reasoning required behind choices, i.e. annotate your working!! Things to know + Expected Questions: • Types of life insurance - Life annuity - Term - Life perpetuity • Proofs: If there were to be a proof we are examined on, it would be on perpetuities (reason being it is easy to mark) • Insurance valuation (principle of equivalence) • Risk loading Types of Math Involved - Annuities or Perpetuities - CEV - Utility - Survival Functions - Life Tables - Probability of Ruin - Principle of Equivalence - Super contribution question - FAS calculations - Reserve calculations 2. Health Insurance (14%) 2 questions worded similarly to those in the tutorial exercises (Week 6: Health Insurance) Brian will be marking this section. Have concise reasoning. There will be no math in this section. Since it is only 14 marks, you should only have 1.5 pages MAX for your response. The question is based more on the current structure of the healthcare system and how it reformed. Things to do • Gather a group of people to share and compare your answers to the health insurance tutorial questions. • Consider reading the IBIS report for health insurance • This is a qualitative question, taken from the tutorial homework 3. General Insurance...
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...New York Life Insurance Company New York Life Insurance Company (NYLIC) is ranked among the top mutual life insurers in the U.S, providing life insurance policies both locally and in overseas. It has always retained its core business, which is life insurance and annuities. Employee Benefits NYLIC uses group life insurance to fill the gaps between employees and employers, through simplified underwritings that guarantee coverage for new employees, and provide them with opportunity to supplement their savings (Miller, 2013). Dental benefit is also offered in a flexible and cost-effective way that ensure employees meet their objectives from a value and cost perspective. Long term disability is the third benefit that finanacially protect employees who can no longer work due to diabilities. There is also a health care spending account whereby amount deposited in it is used to cater for an employee’s health-care and dependent-care expenses. Structural Orgnization New York Life Insurance Company, formed under the New York State Laws, is organized into two main subsidiaries that operate in accordance with the defined requirements of this company by the law. They include: New York Life Insurance and Annuity Corporation, and New York Life Insurance Company of Arizona. Due to subsequently reversed course by the company’s Board of Directors, NYLIC strongly and publicly embrace their preferred mutual nature, through advertisements. Qatar Insurance Company Qatar Insurance Company...
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...the impression he was following the rules • Started working at john Hancock in 1978 and took him four years to become manager then went to MetLife in 1983, took 3 months to become branch manager • By 1993, the branch had 120 reps, 7 sales managers, 30 admin employees • Won sales office of the year award in 1990 and 1991 • After xmas 1993 was summoned by William Groggans, head of the MetLife’s southwest territory and was fired for improper conduct Route to Stardom • Vehicle for strong sales was the life insurance policy which required high premiums but only part earned interest and compounded on a tax deferred basis and rest went to pay for life insurance policy • MetLife policy paid 55% commission on the first year where as an annuity paid 2% • Nurses were constantly convinced to be in need for economic security because constant exposure to death • Salespeople were called “nursing representatives” • Mailed $1m worth of brochures in 1992, 10x any other company office, made $1m in ‘93 Early Warnings • In 1990, Texas insurance commission warned MetLife to stop its nursing ploy and made token compliance by sending out two rounds of admonitory letters • The audit in 1991 raised questions about titles that continued after first warning but the report concluded by congratulating the Tampa Office for its contribution • In summer 1993 Florida state regulators begin a more in-depth examination of the sales concerned about the promotional...
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...is FV (C , r , T ) = C ∗ (1 + r )T = 1000 ∗ (1.05)T (1) which gives 1276.28, 1628.89 and 2078.93 for T = 5, 10, 15 respectively. Patrick C Kiefer 408 Lukas PS1 Problem 2 Now the formula is PV (C , r , T ) = 500 C = T (1 + r ) (1.04)T (2) which equals 480.77, 462.28, 410.96 for T = 1, 2, 5 respectively. Patrick C Kiefer 408 Lukas PS1 Problem 3 The EAR is given by r 1 EAR(r , n) = (1 + )n − 1 = (1 + )12 − 1 = .010045 > .01 n 12 You can see that the effective rate is slightly more than the quoted rate. Patrick C Kiefer 408 Lukas PS1 Problem 4 Now we use T PV (C , r , T ) = i=1 C = 100 (1 + r )i 5 i=1 1 = 421.24 (3) (1.06)i Notice that for computational convenience, the shortcut annuity formula is more tractable: PV (C , r , t) = C ∗ 1 r 1− 1 (1 + r )T (4) Patrick C Kiefer 408 Lukas PS1 Problem 5 We use T NPV (I , C , r , T ) = −I + i=1 C 500 = −10, 000+ T (1 + r ) (1.04)i i=1 ∞ The perpetuity formula is ∞ i=1 C C = i (1 + r ) r (5) so the NPV is -10,000+12,500 = 2,500 for r = .04. For r = .05, the NPV is zero. Note the solution for r = .05 and g = .01 coincides with the solution for r = .04. Patrick C Kiefer 408 Lukas PS1 Problem 6 We use a combination of the formulas introduced above T −12, 000 + i=1 1, 000 1 400 + = 671.10 > 0 (1.04)i (1.04)5 .04 (6) So, take the project if you do not have to turn down another one with a higher NPV. Patrick C Kiefer 408...
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...Variable Annuities—An Analysis of Financial Stability Ma rch 201 3 The Geneva Association (The International Association for the Study of Insurance Economics) The Geneva Association is the leading international insurance “think tank” for strategically important insurance and risk management issues. The Geneva Association identifies fundamental trends and strategic issues where insurance plays a substantial role or which influence the insurance sector. Through the development of research programmes, regular publications and the organisation of international meetings, The Geneva Association serves as a catalyst for progress in the understanding of risk and insurance matters and acts as an information creator and disseminator. It is the leading voice of the largest insurance groups worldwide in the dialogue with international institutions. In parallel, it advances—in economic and cultural terms—the development and application of risk management and the understanding of uncertainty in the modern economy. The Geneva Association membership comprises a statutory maximum of 90 chief executive officers (CEOs) from the world’s top insurance and reinsurance companies. It organises international expert networks and manages discussion platforms for senior insurance executives and specialists as well as policy-makers, regulators and multilateral organisations. The Geneva Association’s annual General Assembly is the most prestigious gathering of leading insurance CEOs worldwide...
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...POLYTECHNIC UNIVERSITY OF THE PHILIPPINES College of Accountancy and Finance DEPARTMENT OF BANKING AND FINANCE Dear Respondents, We are conducting a research on “Preference Criteria in Choosing Health Insurance among Public School Teachers in Rizal High School”. In this regard, we would like to ask for hel, by answering our questions. Thank you very much for your cooperation. Name: (optional) ______________________________________________________________ Instruction: Please put a check on the box of your choice * * Personal Characteristics * Age: ______ * Gender: Male Female * Health Status: Excellent Good Fair Poor * Family Situation: Single Partners without children Partners with children; No. of Children: ____ Single Parent Family Others (Please specify): __________________ * Monthly Income: Php 1001- Php 1500 Php 1501- Php 2000 Php 2001- Php 5000 Php 5001- Php 10000 Above Php 10000 * What type of insurance do you have? Government Insurance Work insurance Others (Please specify): ____________ * What company did you acquire for health insurance? Sun Life of Canada (Philippines) Inc. Pru Life Insurance Corp. of U.K. Philippine American Life & General Ins, Co. Philippine AXA Life Insurance, Corp. BPI Philam Life Assurance Corp., Inc. Others (Please specify): _____________________ * Are you...
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...Name : Dhaval Patil Enrolment No : 13BSP1669 IBS Campus : Mumbai Mobile No : 86525575275 Email–Id : dhpatil13@gmail.com SUMMER INTERNSHIP PROGRAM Project Proposal I. Project Proposed Name of the Organization : IDBI Federal Life Insurance Co Ltd Title of the project : Brand equity and its effects on sales of IDBI Federal Area of the project : Marketing II. Description of the project in Brief IDBI Federal Life Insurance Co. Ltd has built a strong brand in insurance sector by providing value and convenience to the customer. The brand can add significant value when its well-recognized and as positive association in the mind of the consumer this concept is referred to as Brand equity. Brand equity affects the sales. In India 24 insurance companies are currently operating. Differentiation factors of IDBI Federal Life Insurance Co. Ltd will be identified. A study on consumer perception, brand awareness will be conducted and Brand value analysis will be done with IDBI Federal. This project also aims to help the company to achieve its sales objective by focusing on their branding strategies and to understand its effectiveness by understanding the customer perception towards these strategies. III. Objective of the Project Our main objective is to selling the child-insurance...
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...Role of Information Technology in enhancing the customer reach at IDBI Federal Life Insurance Company Ltd. Background of the Study Information technology has been providing wide range of benefits to all the business sectors. It has become hugely beneficial to the Insurance industry also. The key area in which it has provided major improvements and benefits is customer support. Insurance industry is perhaps the best example of an “information-based” industry, because its activities consist of gathering, processing and distributing information. To drive growth and profitability of the company, efforts are required to interact with and retain the customers. Information technology is driving changes in the functions of the insurance companies with its innovations. The companies that fail to keep up with the latest technologies have the risk falling behind in competition by relinquishing their leadership positions. Making no mistake, the insurance industry is at a pivot point as further success is likely to rest on today’s technology strategies and decisions. With increased competition among insurers, service has become a key issue. Customers are looking for more and features that add to better service. So, any insurance company today must meet the need of the hour with more and more sophisticated approaches while handling the customers. Today, managing the customer intelligently is very essential for the insurer, especially in this highly competitive environment. This project...
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...Life Insurance Insurance in India: The penetration for the Insurance category in India is pegged at 3.9% as against the world average of 6.3%. Most G20 countries are above India in terms of life insurance penetration, with South Africa leading the pack at 15.4%. Not only is this number paltry, it is a matter of great worry considering over 51% of the urban households are squarely dependent on a single provider (earning member). (Source – Census 2011) In the case of the passing of the provider or even falling ill, most households get severely strained financially and have to often dip into their savings. This often throws their long term plans off track and adversely affects their aspirations. Life Insurance: The Life Insurance industry was opened up to private players in 2001 and it enjoyed very high growth periods from 2001 to 2008. However post the 2008 bubble, the growth slowed down significantly and in fact witnessed de-growth from 2010 – 2014. In the first quarter of 2015, the industry has reported a robust 20% growth Q-on-Q, however coming largely on the back of strong growth reported by LIC and a few private players. A large number of private players continued to witness negative growth. The Life Insurance industry in India is dominated by LIC with about 70% market share and almost 100% top of the mind recall; the other 23 players account for the balance 30% market share. (Source: Business Standard Article) Products: The LI category is classified into...
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