Actuarial Methodology. As described below, a model was developed from the in force data as of the Statement Date. Model cells were developed for representative plans, issue years, issue ages, premium rate blocks and dividend paying status. Minor plans were mapped into major plans with similar characteristics. Policies with certain plan characteristics were also combined in determining model cells in those situations where small in force amounts warranted such consolidation. Model distinctions were maintained where both material differences in policy characteristics and material in force amounts were present. Historical and prospective projections of statutory contribution to surplus were developed employing the respective assumptions as outlined below. Historical surplus contributions were accumulated with interest to the Statement Date and prospective surplus contributions were discounted to the same date as described in Section II. The sum of each model cell's historical and prospective values as of the Statement Date was divided by the model cell's in force amount as of the Statement Date to calculate that cell's AC factor. Industrial Life model cells were generally not differentiated on a finer basis than the differentiation used for dividend determination. The in force amount was either the statutory policy reserve or the face amount depending on the plan or liberalization (described below). Each eligible policy's AC was then determined from its
Actuarial Methodology. As described below, a model was developed from the DI in force data as of the Statement Date. The essential criterion for defining a model cell was the policy form. Minor plans were mapped into major plans with similar characteristics. Historical and prospective projections of statutory contribution to surplus were developed employing the respective assumptions as outlined below. Historical surplus contributions were accumulated with interest to the Statement Date and prospective surplus contributions were discounted to the same date as described in Section II. The sum of each model cell's historical and prospective values as of the Statement Date was divided by the model cell's premium as of the Statement Date to calculate that cell's AC factor. Each eligible policy's AC was then determined from its actual premium as of Actuarial Contribution Memorandum Page 44 November 16, 1999 521 the Statement Date and the AC factor for the appropriate model cell. No interpolation or extrapolation was necessary.
Actuarial Methodology. As described below, a model was developed from the in force data as of the Statement Date. The important criteria for defining a model cell were plan, issue age and issue year. All plans were modeled as either 10 year certain & life, joint and 100% survivor with 10 year period certain, life only or cash refund benefit. Historical and prospective projections of statutory contribution to surplus were developed using a gains by source approach and employing the respective assumptions as outlined below. Historical surplus contributions were accumulated with interest to the Statement Date and prospective surplus contributions were discounted to the same date as described in Section II. The sum of each model cell's historical and prospective values as of the Statement Date was divided by the model cell's statutory reserve as of the Statement Date to calculate that cell's AC factor. Each eligible contract's AC was then determined from its actual statutory reserve as of the Statement Date and the AC factor for the appropriate model cell. Interpolation and extrapolation on issue age was employed where necessary.
Actuarial Methodology. As described below, a model was developed from the in force data as of the Statement Date. The important criteria for defining a model cell were benefit type and issue year. Plans with other benefits were modeled into one of the modeled plans based on similarity of benefit. Historical and prospective projections of statutory contribution to surplus were developed using a gains by source analysis and employing the respective assumptions as outlined below. Historical surplus contributions were accumulated with interest to the Statement Date and prospective surplus contributions were discounted to the same date as described in Section II. The sum of each model cell's historical and prospective values as of the Statement Date was divided by the model cell's statutory reserve as of the Statement Date to calculate that cell's AC factor. Each eligible contract's AC was then determined from its actual statutory reserve as of the Statement Date and the AC factor for the appropriate model cell.
Actuarial Methodology. For each retained policy, historical contributions to surplus were calculated for each historical year. Prospective contributions to surplus were based on a gross premium reserve calculated using best estimate assumptions. Model cells were developed for representative plans, underwriting categories, issue years, genders, issue ages and loan rates. Minor plans were mapped into major plans with similar characteristics. Historical surplus contributions were accumulated with interest to the Statement Date and prospective surplus contributions were discounted to the same date as described in Section II to determine an AC factor for each cell. This AC value is calculated in Canadian dollars and converted to US dollars as of the valuation date by dividing the calculated AC value by the exchange rate as of the Statement Date.
Actuarial Methodology. Industrial policies have not been written in Canada since 1964. Due to the fact that the Canadian Industrial policies were written on the same policy forms as the US Industrial policies and in general have had similar pricing and dividend methodologies, the same methodology was used to calculate the AC factors as was used to calculate the US Industrial AC factors. The US factors were modified to take into account differences between US and Canadian business. The AC values were calculated in Canadian dollars and converted to US dollars as of the Statement Date by dividing the calculated AC values by the exchange rate as of the Statement Date.
Actuarial Methodology. A representative model was developed to calculate AC factors for this LOB. The in force was modeled into major plan groupings and funding levels. The experience assumptions and contractual characteristics were used in the historical model and prospective assumptions were utilized in the prospective model. Adjustments were made to premiums, mortality and expenses, as described below, and FIT as described in Section II. Historical and prospective projections were developed for each model cell. Historical contributions to surplus were accumulated with interest to the Statement Date and prospective contributions to surplus were discounted to the Statement Date as described in Section II. These historical and prospective values were summed for each model cell to produce the total AC per model cell. The total AC for each model cell was divided by the total face amount (on the Statement Date) of each model cell. This generated an AC factor for each model cell expressed as a percentage factor relative to face amount. Each policy's AC was then determined from its actual face amount and a two dimensional interpolation of its actual funding level and issue age in relation to the modeled funding level and issue age. Actuarial Contribution Memorandum Page 26 November 16, 1999 503 3. Overview of Data and Modeling Seriatim data for the UL policies were provided as of the Statement Date. The data listings included important modeling parameters such as plan code, death benefit option, size band, gender, rating class, smoking status, issue year and issue age. Ratio factors or "funding levels" representing each policy's Account Balance relative to its Net Level Premium ("NLP") reserve were derived and incorporated into the UL model plans. Historical information and data for the MetLife UL blocks were used to develop important items such as credited rates, expenses, premium mode distribution, loan utilization and premium persistency. The UL model utilized the historical Company experience as to mortality, investment income and FIT levels, adjusted appropriately for the specific criteria for each model cell.
Actuarial Methodology. A representative model was developed to calculate AC factors for this LOB. The in force was modeled into major plan groupings and funding levels. The experience assumptions and contractual characteristics were used in the historical model and prospective assumptions were utilized in the prospective model. Adjustments were made to premiums, mortality, and expenses, as described below, and FIT as described in Section II. Historical and prospective projections were developed for each model cell. Historical contributions to surplus were accumulated with interest to the Statement Date and prospective contributions to surplus were discounted to the Statement Date as described in Section II. These historical and prospective values were summed for each model cell to produce the total AC per model cell. The total AC for each model cell was divided by the total face amount (on the Statement Date) of each model cell. This generated an AC factor for each model cell expressed as a percentage factor relative to face amount. Each policy's AC was then determined from its actual face amount and a two dimensional interpolation of its actual funding level and issue age in relation to the modeled funding level and issue age.
Actuarial Methodology. ACs for the MetLife Group Life and Health business are generally composed of an historical calculation (from issue date to the Statement Date) and a prospective calculation for 20 years after the Statement Date, except for SBR and certain PRB products which are based on a projection through the end of the mortality table. The AC was calculated on an annual basis and then adjusted as applicable for changes in reserve margins, FIT, persistency, interest, and growth. Historical contributions to surplus were accumulated with interest to the Statement Date and prospective contributions to surplus were discounted to the Statement Date as described in Section II. The general methodology for determining the AC follows one of two approaches, the Earnings by Source Approach (Method I) or the Net Profit Margin Approach (Method II). METHOD I - EARNINGS BY SOURCE APPROACH Under Method I, the AC was determined based on the sum of three components: underwriting margin, interest margin, and expense margin. This approach generally applies to all cases in NA, NSC, LTCG, SBR, SBC non-ADDO association business and the returned Canadian business. An exception is ADDO LTD coverage, for which Method II was used for the years from 1992 and later. Actuarial Contribution Memorandum Page 35 November 16, 1999 512 Underwriting margins were generally calculated as the sum of the following components: - Contingency Charge Margin - pooled earnings from contingency/risk charges reduced by losses from lapsed deficits and catastrophic claims. - Pool Charge Margins - pools are risk-sharing arrangements. In place of the actual claims, a pool charge is assessed. For each pool, the earnings are the excess of the charges less the actual claims. Interest margins were generally calculated as investment income less interest credits. Expense margins were calculated as expenses charged less actual expenses. METHOD II - NET PROFIT MARGIN APPROACH Under Method II, the AC was determined based on total margin expressed as a percentage of premium by risk classification. This approach was generally applied to all cases in SBC (other than non-ADDO association business), former TNE, and ADDO Long Term Disability business managed by NA and NSC for the years from 1992 and later. Net Profit is determined for each risk classification as the excess of premium plus interest less claims and expenses.
Actuarial Methodology. The historical AC for a given calendar year equals the annual surplus contributions. These contributions were set equal to premiums plus net investment income less cost of insurance, expenses, change in statutory reserve, and FIT. Historical contributions to surplus were accumulated with interest to the Statement Date. The prospective AC for a given calendar year equals the future surplus contributions. These contributions were set equal to premiums plus net investment income less benefits, expenses, change in statutory reserve, and FIT. These surplus contributions were Actuarial Contribution Memorandum Page 40 November 16, 1999 517 discounted to the Statement Date using an after-tax net investment earnings rate as described in Section II. Differences in methodology are noted in the text that follows. GUL/GVUL PAID-UP The prospective AC does not include premiums, since the certificates are paid-up. There are no differences to the methodology stated above. GUL/GVUL POOLED PORTED CERTIFICATES There are no differences to the methodology stated above. All of the model cells produced negative ACs, which were then set to zero. PORTABLE OPTIONAL GROUP TERM LIFE This pool is new and lacks fully credible data. Ported certificates are anticipated to exhibit excess mortality. Models for ported experience indicate there is negative AC from this class of business, which were then set to zero. PORTABLE LTD This pool is new and lacks fully credible data. Ported certificates are anticipated to exhibit excess morbidity. Models for ported experience indicate there is negative AC from this class of business, which were then set to zero.
