The sums are carried out in Excel, the basic operations being generating cashflows, namely initial single premium, investment returns and contractual payments.
Contracts They are EITHER pure endowments (10,000 after 15 years) OR annuities (1,000 per annum for 15 years at end of year), with all payments certain.
Inflation Protection Payments can be either fixed or fully inflation-proofed (RPI).
Pricing Approach This can be either market-related (“MtM”) or off-market (“Off”).
Assets Portfolios There are now 3 different investment options (ILGs excluded).
Random Experiences There are now four (instead of originally six to end-2019).
Random Scenarios The model is run 1,000 times using random numbers which differ over time for each variable.
Expected Returns Separately for each experience, for the “Off” case, the approach is one multiple for equities and another for conventional bonds. This year, I have extended the multiples to be 80% or 100% or 120% of what I have been using.
Surpluses And Deficits No correction payments are made during the 15 years.
Single Premium This is determined by the initial pricing approach.
Results The means, standard deviations, highest 5% and lowest 5% are shown.
Publication The results are mostly shown as interactive HTML5 charts.