Important Points for IC 99 - Asset Management Exam
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The insurance company, in their policy of ALM implementation, aims at maximisation of wealth, solvency and maintaining required liquidity. Such projections enable the insurer to match asset with liability. Thus Asset projection is one of the important aspects of ALM.
There are two types of portfolio management - Passive and Active.
There are basically two approaches of forecasting - Top-down approach and Bottom-up approach.
The insurer is required to match asset projections with liability projection in terms of amount and duration. In case any mismatch is detected, an appropriate Reinvestment strategy or Alternative Investment Strategy is to be adopted immediately.
Duration analysis provides volatility exposure of assets, liabilities and surplus. DGA based on calculation of duration of assets and liabilities, helps in measuring the volatility exposure of surplus and surplus duration.
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