Reply To: Interview Question for CT5 – 7

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March 18, 2019 at 12:15 pm #24544
schavda
Participant

    RISHABH wrote:


    Q. What are the two methods of calculating reserves? Under which conditions, in general, these are equal?

    Ans: Reserves may be calculated by:

    [BLACK SMALL SQUARE]Prospective method (looking forward) – By discounting estimated future cash flows.

    [BLACK SMALL SQUARE] Retrospective method (looking backward) – By accumulating past cash flows.

    If this is calculated on the same basis as used in pricing basis and reserving basis, then the reserve calculated under both the methods will be the same.

    Also Read : Exercise on MIN and MAX function

    http://forum.theactuarialclub.com/exercise-on-min-and-max-function-t2762.html

    Sent from my SM-A605G using Actuarial Info mobile app


    Is there a way someone can offer/illustrate this reserving calculation example in an Excel file? It would be useful to model a real life product.