MTHEL131 Lecture Notes - Lecture 4: Mutual Organization, Manulife, Life Insurance
12 Apr 2016
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The old equitable: principles were so sound, all other following companies followed, 3 fundamental factors of pricing: Mortality rates (esimate what mortality rates will be over next 12 months) Investment returns (esimate investment returns over next 12 months) Company expenses (esimate expenses over next 12 months) Reason company wants would rather charge too much than too litle is that they may not be able to keep promise. Actuaries look at projecions of 3 pricing factors ater a period of ime (e. g. 12 months) and say how close the actual results compared. Old equitable looked at this and saw they were in very favourable posiion. Owners of old equitable: set up by a group of interested paries that were interested in insuring the lives of each other. An insurance company owned by policyholders is called a mutual company. Opposite of mutual is a stock company which is owned by the shareholders.
