Reservation and surplus participation of pension insurance policies in the portfolio

Abstract

The guideline Derivation of the DAV Mortality Table 2004 R for Pension Insurance presents a system of generation mortality tables with the designation Mortality Table DAV 2004 R for use in reserving new life insurance policies with survival benefits (in particular pension insurance policies) taken out from the beginning of 2005. The DAV 2004 R mortality table is also suitable for calculating premiums for life insurance policies with a survival benefit. For the reservation of life insurance policies with a survival benefit concluded by the end of 2004, the use of other mortality tables with lower safety margins, which are derived in this guideline, is sufficient. This guideline, which was first adopted by the DAV Executive Board on September 14, 2015, also specifies methodological principles for the reservation of current pension insurance portfolios. The guideline applies to reserves as of the balance sheet date of December 31, 2004. In addition, it contains references to actuarially appropriate procedures for financing the replenishment of reserves through profit participation, which do not have the character of a guideline.

The regular review of the guideline on reservations and surplus participation for pension insurance policies in the portfolio dated September 14, 2005, updated on January 12, 2018, has shown that the guideline can be retained. This result is based, among other things, on the findings of the review of the guideline on the derivation of the DAV mortality table 2004 R for pension insurance policies and the findings published in the current DAV trend report. The results of this analysis are summarized in the report on the regular review of the guideline “Reservations and profit sharing for pension insurance policies in the portfolio” dated November 27, 2023.

Of course, every responsible actuary must check whether there are any company-specific circumstances that would prevent the mortality tables derived in the guideline from being adopted unchanged for the purposes of setting aside reserves for a particular company. If necessary, the responsible actuary must make appropriate adjustments to the mortality tables.

The material scope of this guideline covers life insurance companies. However, in accordance with the principles of the DAV Directive on Biometric Calculation Bases and Interest Rates for Pension Funds and Pension Schemes of January 28, 2019, they apply equally to pension funds and pension schemes, provided that the same conditions apply as for life insurance companies, in particular that benefits and contributions are guaranteed without any restrictions. It also applies to property and casualty insurance companies when calculating the coverage provision for old-age and survivors' pensions in accident insurance with guaranteed contribution repayment.