What is the purpose of the Reserve Reconciliation Report in AXIS?
The Reserve Reconciliation Report reconciles the calculated terminal reserve per unit between the start and end of each policy year, showing how reserve levels change over time.
What does ‘reconcile the terminal reserve per unit’ mean?
It means analyzing how the reserve per $1,000 nominal face changes during the year due to cashflows, decrements (e.g., deaths, lapses), and interest adjustments.
What information does the Reserve Reconciliation Report display?
It displays cashflows, interest accumulation, and reserve releases that occur duration by duration, showing the detailed flow of reserve movements over the policy year.
Why are values shown per $1,000 nominal face?
Standardizing to $1,000 face amount allows for easy comparison across policies and simplifies interpretation of reserve changes regardless of policy size.
What are ‘decrements’ and how do they affect the reserve?
Decrements are policy terminations such as death, surrender, or lapse. Each decrement releases part of the reserve since the obligation for that policy ends.
Why is interest included in the Reserve Reconciliation Report?
Interest represents the assumed investment growth on reserves. It’s added to track how reserve balances evolve with time and investment income assumptions.
Why is the Reserve Reconciliation Report important for actuaries?
It helps actuaries verify that reserve changes align with expected policy movements and financial assumptions, ensuring model accuracy and consistency with accounting results.
