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I don't have the paper either, but will try to answer part (2). I believe
he's referring to the policy from year 1 to year 2. He says that regardless
of the claims inflation impacts, the real return on the policy (v) must
increase by the rate of return required (which seems silly to me). So if
claims inflation is 10% and required rate of return is 8%, the profit
portion of the premium will grow less than the claims portion of the
premium.
-----Original Message-----
From: Elaine.Lajeunesse@ca.eyi.com [SMTP:Elaine.Lajeunesse@ca.eyi.com]
Sent: Friday, March 19, 1999 7:50 AM
To: studygroup10@lists.casact.org
Subject: Re: Butsic Inflation - 2 questions
I maybe wrong because I don't have the paper with me, but I think I know
the answer to the first part
(1) (m sub i) refers to the remaining duration while m refers to the total
duration.
"Jonathan L. Summers" <jons@in.net> on 03/18/99 10:30:32 PM
To: studygroup10@lists.casact.org
cc: (bcc: Elaine Lajeunesse/ABC/ErnstYoung/CA)
Subject: Butsic Inflation - 2 questions
I don't know if these are important questions, but they have been
bugging me:
(1) At the bottom of page 73 of the "Inflation" paper, Butsic says that
(m sub i) <= m for i > 0. Why is this true? (By the way, how do I make
subscripts in an e-mail?)
(2) At the top of page 79, I am confused because he mentions 2
policies, but I'm not sure what 2 policies he's talking about. He also
says that (V sub i) must equal V(1+r). Why is there any such
relationship at all between 2 different policies?
Jon
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I don't have the paper either, but =will try to answer part (2). I believe he's referring to the =policy from year 1 to year 2. He says that regardless of the =claims inflation impacts, the real return on the policy (v) must =increase by the rate of return required (which seems silly to =me). So if claims inflation is 10% and required rate of return is =8%, the profit portion of the premium will grow less than the claims =portion of the premium.
-----Original =Message-----
From: =Elaine.Lajeunesse@ca.eyi.com =[SMTP:Elaine.Lajeunesse@ca.eyi.com]
Sent: Friday, March 19, 1999 7:50 AM
To: studygroup10@lists.casact.org
Subject: = Re: Butsic Inflation - 2 =questions
I maybe wrong =because I don't have the paper with me, but I think I know
the answer to the =first part
(1) (m sub i) =refers to the remaining duration while m refers to the total
duration.
"Jonathan L. =Summers" <jons@in.net> on 03/18/99 10:30:32 PM
To: =studygroup10@lists.casact.org
cc: (bcc: Elaine =Lajeunesse/ABC/ErnstYoung/CA)
Subject: =Butsic Inflation - 2 questions
I don't know if =these are important questions, but they have been
bugging me:
(1) At the =bottom of page 73 of the "Inflation" paper, Butsic says =that
(m sub i) <=3D m =for i > 0. Why is this true? (By the way, how do I =make
subscripts in an =e-mail?)
(2) At the top =of page 79, I am confused because he mentions 2
policies, but I'm =not sure what 2 policies he's talking about. He also
says that (V sub i) =must equal V(1+r). Why is there any such
relationship at all =between 2 different policies?
Jon