IGP Tranini g Workshop Review of an IGP Pooling Report...This presentation was exclusively prepared for xxx. None of the contents of this presentation may be copied or disclosed to

© International Group Program 1

This presentation was exclusively prepared for xxx. None of the contents of this presentation may be copied or disclosed to any other party or used for any other purpose than the one mentioned above without IGP's prior written permission.

IGP Training Workshop Review of an IGP Pooling Report

IGP EMEA Seminar Windsor, May 31, 2016

Susan Angelastro Executive Consultant, IGP Boston

© International Group Program

Introduction

• IER International Experience Report

• PYER Policy Year End Report

• PYE Policy Year End

• IEY International End Year

• CIA Contribution to International Account

Abbreviations used…


Introduction

• IER International Experience Report Prepared annually

‐ SGP clients : June 30 ‐ Other clients: date agreed with IGP

Combines experience of all contracts placed with an IGP Network Partner and pooled

Useful management tool

What is the IER?

International Experience Report

COMPANY NAME Day Month Year


Introduction

• Why is it a useful management tool? Determination of the International Dividend Review of actual experience Underwriting review per country Sales and conservation tool vis-à-vis local subsidiary

IER as Management Tool


Introduction How is the IER prepared?

PYER •By Network Partner •Local report •In local currency

PYER Analysis •IGP Administration (Boston) •Analysis of local figures

Test IER •Analyzed and checked by IGP Account Team

Final IER •Presented to corporate HQ

Money Transfers


IGP Pooling Report - Content

• Divided into 4 main sections: Section I

‐ Account Information ‐ Executive Summary ‐ Historical Overview ‐ Composition of the Account ‐ List of Subsidiaries Included in IGP ‐ Key Figures ‐ Pooled Premium & Current Year’s Result (Line 12) - in USD (graph)

Section II

‐ All units combined in USD

Section III ‐ Historical analysis per unit in local currency ‐ Provides most insight in local plans

Section IV

‐ General explanatory notes

• Excel version automatically produced along with the Word version

How is the IER built up?



• Page 1 Account Information Executive Summary Historical Overview

Section I



• Page 3 Key Figures Pooled Premium & Current Year’s

Result (Line 12) - in USD (graph)

Section I



• Page 1 Total results in USD Lines 1-12 reflect local experience Line 13 reflects local interest from PYE

to IEY Line 15 reflects

‐ the prior margin or deficit from a previous report (including interest)

‐ currency adjustments

• Page 2 and further Country results in USD

Section II



• Interest credited on margin / debited on deficit

• From local policy year end date (PYE) until international year end date (IEY)

• Calculated at local interest rate

• Example page 2

Section II – Interest on Subtotal (line 13)



• Carry forward of unpaid margin or un-recuperated deficit from previous year Money kept by or owed to local insurer Carried forward interest in local currency Local interest added for 1 year Reconverted to USD at current exchange rates

Section II – Prior Margin / Deficit (line 15a.)



• Difference between exchange rate shown in IER and the rate actually used for money transfer Risk born by the client

• Can be positive or negative depending on currency fluctuations

Section II – Currency Adjustments (line 15b.)



• Either ...

Dividend to be paid to parent or distributed to subsidiaries

• Or...

Un-recuperated deficit to be carried forward

Section II – Accumulated CIA (line 16)



• Local experience in local currency

• Numbers are reflected in Section II lines 1-12 in USD

Section III



• Example: South Africa 12

Section III – Lives & Premium



• Number of insured per subsidiary can differ from one coverage to another can be beginning or end of year figures (depends on local

administration) change of lives can at times explain change in premium etc.

• Premium fluctuation could be caused by: Change in insured lives Change in level of coverage Additional line of business Rate change/review

Section III – Lives & Premium



• Main types of reserves IBNR reserves Policy reserves Dividend reserves Claim reserves CSR

• Reason for fluctuations could be : Single premium payment Claim payments (e.g. surrender values, LSDB, new W&O pensions or

disability claims…) Recovery from disability Transfer of reserve from one unit to another Additional line of business

Section III - Change in Reserves



• On reserves IBNR reserves policy or mathematical reserves dividend reserves claim reserves

• Different formulae possible

• Rate of interest varies

Section III - Investment Income



• Old Age Pension reserves Technical (aka. guaranteed) i-rate (Tariff i-rate) :

‐ typically dictated by insurance authorities ‐ increases the policy reserves

Excess i-rate : ‐ goes to local dividend reserve and can be used to

• increase the retirement benefit or • lower the retirement premium ( ‘er contributions)

Section III – Investment Income



• Interest on premium float could be negative due to adverse claims experience or very late

premium payment Calculated in two parts :

‐ Interest on Premium (depends on mode of premium payment) ‐ Interest on Margin (or deficit)

Section III – Investment Income



• If no change in local... ... coverage ... premium ... number of lives => No change in Expenses and Risk

• But... Larger pools => lower risk Annually adjusted to inflation Could include claims handling charge for medical plans

Section III – Expenses and Risk



• Are only charged to the account if paid by the insurer out of the gross premium

Section III - Commissions and Taxes



• Pooled Local Dividend Based on total portfolio of local

insurer Payable even if contract is in

deficit

• Rebate on premium

• Experience rated dividend Takes into account the actual

claims experience of the local contract

With high claims => no local dividend

Sometimes adjustment from previous year

Section III - Local Dividend



• Most multinationals share back (part of) the international dividend with participating subsidiaries Incentive Most common formula: Dividend/Σ Margins DOID (Distribution of International Dividends) spreadsheet

automatically available

24

IER – Bottom Line


Questions & Answers

Documents

IGP Tranini g Workshop Review of an IGP Pooling Report...This presentation was exclusively prepared for xxx. None of the contents of this presentation may be copied or disclosed to