Glossary

The number of occupied units at each level of care by contractual and non-contractual residents, relative to available units.

The actuarial present value, as of a valuation date, of all benefits expected to become payable in the future as a result of an event or events expected to occur during a valuation year. (ASOP No. 4)

Terms used to distinguish between two classes of actuarial cost methods. Under an open group actuarial cost method, actuarial present values associated with expected future entrants are considered; under a closed group actuarial cost method, actuarial present values associated with future entrants are not considered. (ASOP No. 4)

The sum of underwriting profit, miscellaneous (non-investment) income from insurance operations, and investment income from insurance operations. Associated income taxes are recognized when the analysis is on a post-tax basis. (ASOP No. 30)

All portions of the plan of conversion that specify the methods and procedures for setting up, maintaining, and monitoring the operations of a closed block. (ASOP No. 33)

An actuarial communication made orally that has not, to the knowledge of the actuary, been recorded or transcribed verbatim. Such an oral communication is an actuarial communication, but is not an actuarial document. (ASOP No. 41)

The entity for which ERM is being performed. Examples include public or private companies, government entities, and associations, whether for profit or not for profit. (ASOP No. 46)

An internal assessment of the adequacy of an organization’s risk management and current, and likely future, solvency position, including action plans produced from the assessment. ORSA is a widely recognized key component of the ERM frameworks of many insurance organizations. ORSA is a requirement in most insurance regulatory regimes globally, although in some regimes it is not mandated for certain organizations. Nevertheless, some organizations elect to perform non-mandated ORSAs.

A report produced with the following objectives: a) to communicate the main outcomes, rationale, calculations, conclusions, and action plans of the ORSA to senior management and board level; b) to explain to insurance regulators how the ERM framework operates; and c) to outline to insurance regulators the results of the solvency assessment.

Costs, other than commission and brokerage fees, associated with the acquisition of business. (ASOP No. 29)

All cash flows not related to underwriting or investment operations. Examples include shareholder dividends, capital contributions, and non-risk bearing fee income.

Cash flows not specifically associated with asset or policy cash flows. Examples are corporate expenses, payables, surplus notes, shareholder dividends, or balance sheet items that result from litigation. (ASOP No. 7)

Any recipient of an actuarial communication who is not an intended user. (ASOP No. 41)

The results of a model including point estimates, likely or possible ranges, parameters (as input for other models), or qualitative criteria on which decisions could be made.

A method used by the actuary to adjust the results of a contribution allocation procedure to reduce volatility.

A situation where a model fits sample data so closely that prediction accuracy decreases when the model is applied to different (for example, out-of-sample) data.

Pension obligation values incorporate assumptions about pension payment commencement, duration, and amount. Pension obligation values also require discount rates to convert future expected payments into present values. In order to measure a pension obligation, the actuary will typically need to select or assess assumptions underlying the obligation.

An internal assessment of the adequacy of an organization’s risk management and current, and likely future, solvency position, including action plans produced from the assessment. ORSA is a widely recognized key component of the ERM frameworks of many insurance organizations. ORSA is a requirement in most insurance regulatory regimes globally, although in some regimes it is not mandated for certain organizations. Nevertheless, some organizations elect to perform non-mandated ORSAs.