ACT 202 · Year 2 · Semester 2 · 4 credits · Actuarial
Long-Term Actuarial Mathematics I: Life Contingencies
Valuing uncertain human lifetimes with mathematical elegance, from survival curves to policy reserves.
The Solvency Threshold
When state regulators flag a forty-million-dollar valuation discrepancy in Apex Mutual's flagship whole life and retirement portfolio, newly appointed valuation actuary Maya Lin must dismantle and rebuild the company's actuarial models from fundamental survival laws to multi-state profit testing before the statutory audit deadline forces liquidation.
At six-fifteen on a Tuesday morning, Maya Lin finds a red statutory audit notice taped to her office door. The Illinois Department of Insurance has identified a catastrophic divergence between Apex Mutual's baseline mortality assumptions and its actual death claims across fifty thousand whole life policies written since 1995. If Maya cannot prove how the baseline hazard rates were constructed by end of week, the commissioner will issue a cease-and-desist order.
Transcript
At six-fifteen on a Tuesday morning, Maya Lin finds a red statutory audit notice taped to her office door. The Illinois Department of Insurance has identified a catastrophic divergence between Apex Mutual's baseline mortality assumptions and its actual death claims across fifty thousand whole life policies written since 1995. If Maya cannot prove how the baseline hazard rates were constructed by end of week, the commissioner will issue a cease-and-desist order.
- Formulate the future lifetime random variable and its conditional survival and mortality probabilities
- Derive the fundamental differential and integral relationships connecting the force of mortality to survival functions
- Calculate complete and curtate expectations of life using continuous and discrete formulations
- Construct and manipulate life table functions to evaluate multi-year and deferred survival probabilities