Finance and Financial Management Commons^™

Journal Of Actuarial Practice, Volume 3, No.1, 1995, Colin Ramsay , Editor

Journal of Actuarial Practice (1993–2006)

ARTICLES

Life Insurer Risk-Based Capital: An Option Pricing Approach • Samuel H. Cox and Arthur M.s. Hogan

Surveillance of Life Insurer Solvency: A Comparison of Stock and The Multiple Scenario Cash Flow Financial Stress Tests • Ronald W. Spahr and Paul L. Gronewolier

HIV, AIDS, Markov Processes, and Health and Disability Insurance • Steven Haberman

Obtaining a Life Table for Spinal Cord Injury Patients Using Information Theory • Patrick L. Brockett and Yun Song

Simulation of Investment Returns for a Money Purchase Fund • M. Zaki Khorasanee

Decision Making Under Conflicting Criteria In Pension Valuations: An Expected Utility Model • …

The New Auditor's Report: Have The Benefits Of Wording Changes Been Acknowledged Outside The Cpa Profession?, Marshall A. Geiger

Accounting Faculty Publications

CPAs use the auditor's report to communicate their opinions of an entity's financial statements and related disclosures. Concerned parties, in turn, use the report to assess the integrity of the financial statements and the accuracy of the disclosures.

In 1988, the American Institute of CPAs auditing standards board established new wording for the standard unqualified audit report. It also revised the reporting requirements and types of audit reports allowed (for example, the subject-to report for uncertainties and except-for report for consistency departures were eliminated). The new wording appears in Statement on Auditing Standards no. 58, Reports on Audited Financial Statements …

No. 124 1994 November

International Journal for Business Education

SIEC Historical Documents

No. 123 1994 April

International Journal for Business Education

SIEC Historical Documents

Managing The Costs And Risks Of Housing Finance: A New Role For Actuaries, Anthony Asher

Journal of Actuarial Practice (1993–2006)

Housing finance is a nontraditional field where actuarial expertise could be applied fruitfully. The development of mortgage instruments requires the application of financial mathematics, while the evaluation and management of the financial risks to which borrowers and lenders are exposed require a knowledge of insurance principles. This paper splits the financial costs of home ownership into several components: those that arise from inflation, risk, administration, and the residual real interest charge. The risk component further is partitioned into life contingencies, economic contingencies, and various moral hazards. This analysis provides a basis for future financial innovation, highlights where government intervention may …

Journal Of Actuarial Practice, Volume 2, No.2, 1994, Colin Ramsay , Editor

Journal of Actuarial Practice (1993–2006)

ARTICLES

Disenrollment Patterns of Elderly in Managed Care and Fee for Service • Kenneth G. Manton, H. Dennis Tolley, Robert Newcomer, James C. Vertrees, and Charlene Harrington

Modeling Insurance Cash Flows for Universal Life Policies • Robert E. Hoyt

Modal Premium Factors in Ordinary Life Insurance • James B. Ross and Criss G. Woodruff

Predicting Automobile Insurance Multi-Regional Base Pure Premiums • Edward Nissan and Iskandar S. Hamwi

A Statistical Approach to IBNR Reserves • Bradford S. Gile

Safety First and Ambiguity • Lawrence A. Berger and Howard Kunreuther

Discussion of Robert L. Brown's "Tax Assistance to Qualified Retirement Savings …

Health Insurance Reform And Its Effects On The Small Employer Market: A Review Of H.R. 3626, Anthony P. Hammond

Journal of Actuarial Practice (1993–2006)

This paper provides a detailed analysis of H.R. 3626, a bill that is intended to improve employers' and employees' access to health care. H.R. 3626 attempts to accomplish this through the use of guaranteed availability, community rating, and generous standard benefits. A migration model is used to analyze the impact of H.R. 3626. Using this model, it is shown that while improving the availability and affordability of health insurance, its rating restrictions increase premiums disproportionately for the majority of small employers. In addition, H.R. 3626 increases the number of uninsured small employers.

The Markov Chain Interest Rate Scenario Generator Revisited, Sarah L.M. Christiansen

Journal of Actuarial Practice (1993–2006)

This paper furthers the development of the Markov chain interest rate generator. Though the basic technique remains essentially unchanged, there are still many significant changes to the model. For example: (i) the long (key) rates are now are generated by a mean reversionary process; (ii) the number of shapes is increased from seven to 11; (iii) the limitation of changing by only two shape codes per year is removed; and (iv) the random walk matrix that determines the shapes is revised to be more realistic. An algorithm is developed to determine the shape code of the original yield curve, thus …

An Introduction To Individual Disability Income Insurance, Mark J. Chartier

Journal of Actuarial Practice (1993–2006)

There are several actuarial software packages purporting to calculate expected benefit cash flows on disability income insurance policies. To the author's knowledge, however, there is no published text that explains how to perform these calculations. This paper is intended to fill this gap in the literature. It describes some of the more common techniques for pricing disability income insurance. Those techniques for which claim costs can be used and those for which the pricing actuary must project cash flows are identified.

Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver?, Robert L. Brown

Journal of Actuarial Practice (1993–2006)

There exist significant tax incentives for retirement savings plans in Canada and the United States. Qualified employer and employee contributions, within limits, are tax deductible to the employer and nontaxable to the employee. Also, investment income is not taxed until taken. On the other hand, monies received from funds having such tax incentives are taxable in full as income to the recipient when taken. This paper analyzes the two tax advantages of qualified retirement savings plans: the tax deductibility of contributions and the nontaxation of investment income until it has been distributed. The algebraic analysis shows that the deductibility of …

"Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver": Author's Reply To Previous The Discussion*, Robert L. Brown

Journal of Actuarial Practice (1993–2006)

No abstract provided.

Safety First And Ambiguity, Lawrence A. Berger, Howard Kunreuther

Journal of Actuarial Practice (1993–2006)

There is considerable empirical evidence suggesting that ambiguity (i.e., parameter risk) impacts pricing decisions by actuaries and underwriters and their desire to provide coverage. Stone proposed a safety first model of choice that provides a possible explanation for this behavior. This paper analyzes Stone's proposed stability and survival constraints and compares the results with those predicted by expected utility theory. The analysis is motivated by insurers' increasing reluctance to provide coverage for certain specific risks such as earthquake damage insurance where the probability of loss is ambiguous. We show that such behavior is consistent with safety first but is difficult …

Reconciling Two Rate Level Indications: A Chain Rule Approach, Cheng-Sheng Peter Wu

Journal of Actuarial Practice (1993–2006)

The problem considered is that of reconciling two rate level indications that are based on several common factors, but have been made at different review periods. A popular approach to this problem is the so-called sequential replacement method, which calculates the impact of each individual factor. Unfortunately, this method has a serious deficiency: the estimated impact of a factor depends upon the order of the replacement. To counteract this defect, a new approach, called the chain rule approach, is developed. Using this approach, an explicit formula is given for calculating the impact and the marginal impact of each factor.

Modal Premium Factors In Ordinary Life Insurance, James B. Ross, Criss G. Woodruff

Journal of Actuarial Practice (1993–2006)

For ordinary life policyholders who want to pay more frequently than annually, insurers construct schedules of modal premium factors that reflect additional charges for the costs of collection, forgone interest, and premiums uncollected or refunded in the year of death. Competition within the industry forces convergence of such schedules. On the other hand, if such factors for a given company reflect its own experience (in expense, interest, mortality, and persistency), the differences between companies will force schedules apart. Analysis of a large group of life insurers over the 1972-1982-1992 period shows that modal premium factors are dustered closely, that they …

Cost Containment In Workers' Compensation: Evaluating Medical Fee Schedules, David L. Durbin, Barry I. Llewellyn

Journal of Actuarial Practice (1993–2006)

Medical expenditures in workers' compensation programs have been subjected to few cost containment strategies. As workers' compensation costs have escalated, however, increasing attention is being given to the role of medical fee schedules in containing the prices of medical services. To this end, we develop a model for estimating the potential cost savings from implementing medical fee schedules. A market basket of medical services received by injured workers is constructed. This basket is used to estimate the parameters of the model. In addition, the basket is used to determine the impact of imposing a fee schedule linked to usual and …

Predicting Automobile Insurance Multi-Regional Base Pure Premiums, Edward Nissan, Iskandar S. Hamwi

Journal of Actuarial Practice (1993–2006)

Multi-regional insurance base premiums are customarily computed by a top-down method where national or state projections are adjusted to reflect regional differences. This paper proposes a methodology for a bottom-up projection. A weighing scheme that minimizes the variance of the estimator is suggested as a criterion to establish an overall multi-regional rate.

Modeling Insurance Cash Flows For Universal Life Policies, Robert E. Hoyt

Journal of Actuarial Practice (1993–2006)

This paper develops a methodology that can be used by insurers to construct predictive models for their own insurance cash flows. The insurance cash flow components evaluated include premium flows, policy loans, and cash value surrenders. Also, the paper evaluates several hypotheses in the insurance literature that attempt to explain insurance cash flows. Though the results are theoretically consistent, they produce some interesting contrasts to findings of similar studies for whole life policies. For example, these results confirm that: (i) the credited rate strategy is important to policy performance; (ii) the emergency fund hypothesis appears to apply to policy loan …

A Statistical Approach To Ibnr Reserves, Bradford S. Gile

Journal of Actuarial Practice (1993–2006)

This paper develops a three dimensional statistical approach to the estimation of the mean and the standard deviation of pure incurred but not reported (IBNR) reserves. This means that the time of occurrence, the reporting lag, and the claim severity are separately modeled. It is assumed that, beyond any fixed time t, the claim number development process is Poisson and that the severity of loss depends on the length of the reporting lag. Two key assumptions are made to simplify the estimation of model parameters: for a given reporting lag, (i) the conditional mean of the claim size is a …

Discussion Of Robert L. Brown's "Tax Assistance To Qualified Retirement Savings Plans: Deferral Or Waiver"*, Mark W. Campbell

Journal of Actuarial Practice (1993–2006)

In the paper entitled "Tax Assistance to Qualified Retirement Savings Plans: Deferral or Waiver," Robert L. Brown concludes that "the nontaxation of investment income on qualified funds until taken is a tax waiver or tax subsidy from the government to participants of qualified plans". I believe, however, that this conclusion is based on flawed assumptions pertaining to:

• The behavioral responses of taxpayers to the withdrawal of such tax assistance;

• The definition of an appropriate benchmark tax system against which to measure the cost of such tax assistance; and

• The appropriate basis of comparison of alternative government tax …

Disenrollment Patterns Of Elderly In Managed Care And Fee For Service, Kenneth G. Manton, Dennis H. Tolley, Robert Newcomer, James C. Vertrees, Charlene Harrington

Journal of Actuarial Practice (1993–2006)

As the trend to provide health care through managed care facilities increases, the need to examine ,vhy insured individuals voluntarily terminate managed care coverage grows. Voluntary termination of coverage, or dis enrollment, has both social and fiscal implications. Particularly among the elderly, patterns of disenrollment likely are related to self assessment of care needs and levels of health. In this paper we examine the patterns of dis enrollment among elderly enrollees as a function of health status and disability. We focus on disenrollment patterns from an experimental prepaid extended care facility, called a social HMO (S/HMO) and compare this pattern …

Journal Of Actuarial Practice, Volume 2, No. 1, 1994, Colin Ramsay , Editor

Journal of Actuarial Practice (1993–2006)

ARTICLES

Health Insurance Reform and its Effects on the Small Employer Market: A Review of H.R. 3626 • P. Anthony Hammond

An Introduction to Individual Disability Income Insurance • Mark J. Chartier

Cost Containment in Workers' Compensation: Evaluating Medical Fee Schedules • David L. Durbin and Barry I. Llewellyn

The Markov Chain Interest Rate Scenario Generator Revisited • Sarah L.M. Christiansen

Managing the Costs and Risks of Housing Finance: A New Role For Actuaries • Anthony Asher

Reconciling Two Rate Level Indications: A Chain Rule Approach • Cheng-Sheng Peter Wu

Tax Assistance to Qualified Retirement Savings Plans: Deferral or Waiver? …

Investor Views Of Audit Assurance: Recent Evidence Of The Expectation Gap, Marshall A. Geiger

Accounting Faculty Publications

Investors and financial statement users long have agreed on the usefulness of the audit in financial reporting. Over time, however, auditors have been expected to provide assurance in varying degrees and for different purposes. Differences in perception -- especially regarding assurances provided -- between users, preparers and auditors have been termed the "expectation gap. This article provides some startling evidence of the existence of such a gap in investor perceptions of the assurance provided by an audit.

No. 121 1993 April

International Journal for Business Education

SIEC Historical Documents

Exhibit 1 - 1992-98 Capital Planning System, Wku Board Of Regents

Board of Regents Documents

1992-98 Capital Planning System project report for WKU.

1992-1993 Financial Summary, Morehead State University. Budget & Financial Planning Office.

Morehead State University Financial Summaries Archive

No abstract provided.

Journal Of Actuarial Practice, Volume 1, No. 2, 1993, Colin Ramsay , Editor

Journal of Actuarial Practice (1993–2006)

ARTICLES

Ethical Issues, Helps, and Challenges: Perceptions of U.S. Actuaries • Therese M. Vaughan, Robert W. Cooper, and Garry L. Frank

Managing the Relative Volumes of Participating and Nonparticipating Business in a Mutual Life Company • Robert G. Chadburn

A Critique of Defined Contribution Plans Using a Simulation Approach • David M. Knox

Discussion • Michael Sze & David M. Knox's Reply

The Definition of Insurance: Implications for a Health Insurance Demand Model • Mark J. Browne

Discussion • Charles S. Fuhrer & Mark J. Browne's Reply

On the Equivalence of the Loss Ratio and Pure Premium Methods of Determining …

Discussion Of David Knox's "A Critique Of Defined Contribution Plans Using A Simulation Approach", Michael Sze

Journal of Actuarial Practice (1993–2006)

No abstract provided.

Funding Methods And Pension Plan Amendments, Keith P. Sharp

Journal of Actuarial Practice (1993–2006)

This paper considers the treatment of plan amendments under the individual entry age normal and projected unit credit methods. Alternative treatments are considered, and comments are made about their acceptability.

The Small Plan Audit Program: The Opinions Of The Court, Arnold F. Shapiro

Journal of Actuarial Practice (1993–2006)

One of the most important issues of recent years from the perspective of many pension actuaries is the IRS's small plan audit program. The program initially was expected to raise two-thirds of a billion dollars by targeting well-funded defined benefit plans with five or fewer participants. The focus of the audit was the assumed interest rate and the normal retirement age, both of which the IRS generally regarded as too low. While the focus of the audit was relatively narrow, the issue it raised was a funda mental one. The basic question was the extent to which the IRS could …

Global Social Security: How The Rules Are Changing In Certain Countries, Robert J. Myers

Journal of Actuarial Practice (1993–2006)

Social security programs (i.e., national pension systems) differ widely between countries. This is only natural, and desirable, because of varying social and economic conditions and philosophies. This paper discusses some of the general worldwide trends, such as the equal treatment of men and women, increases in the normal retirement age, projection of future costs, and the different philosophies of social security. Some of the interesting and unique changes recently made in selected countries-Canada, Chile, Eastern European countries, Germany, Japan, People's Republic of China, Saudi Arabia, Union of Soviet Socialist Republics, United Kingdom, and United States-are described.