Intro To Prophet

Introduction to Prophet Tutorial
Release 7.2
IJKLM
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Document No. PR720-3001-0903

i
Contents
Introduction..................................................................................................1
About this tutorial .......................................................................................... 1
Lesson 1 - Setting up a simple product ...........................................................................3

Details of the product..................................................................................... 4
Starting the tutorial ........................................................................................ 6
Product Design view ...................................................................................... 8
Creating the product .................................................................................... 11
Selecting the indicators ................................................................................ 13
Specifying the input variables ....................................................................... 17
Lesson 2 - Setting up model point files and tables.......................................................33

Introduction ................................................................................................. 34
Setting up a structure................................................................................... 35
Setting up the model point file ..................................................................... 37
Setting up a parameter file ........................................................................... 41
Setting up a global file.................................................................................. 44
Lesson 3 - Setting up, running and reporting on a product.........................................49

Setting up a run setting ................................................................................ 50
Running the product .................................................................................... 58
Identifying why a run has failed.................................................................... 59
Viewing results produced in a run ................................................................ 61
Lesson 4 - Reporting on dependencies in Diagram view.............................................67

Introduction ................................................................................................. 68
The main Diagram view window .................................................................. 69
Using Diagram view to identify how to change the product.......................... 72
ii Contents
Lesson 5 - Updating libraries and products ..................................................................75

Adding a new variable to the library..............................................................76
Updating the product ...................................................................................81
Choosing a scenario which shows the effects of product changes .................91
Identifying an error in the run ......................................................................93
Lesson 6 - Further topics ................................................................................................95

Regeneration of products..............................................................................96
Re-scanning of products (Auto-Scan) ..........................................................98
Conclusion ...................................................................................................99
Conventional product input files & results ..................................................................101

Product listing ............................................................................................102
Model point file ..........................................................................................109
Parameter file .............................................................................................110
Global file...................................................................................................111
Results........................................................................................................112
International product input files & results ...................................................................117

Product listing ............................................................................................118
Model point file ..........................................................................................124
Parameter file .............................................................................................125
Global file...................................................................................................126
Results........................................................................................................127
1
Introduction
About this tutorial

This tutorial is intended to give new users of Prophet an introduction to the
main features of the system. It assumes that users already have some
understanding of the actuarial concepts involved.
It shows you how to set up a product using either the Conventional or

International library. Both these libraries enable traditional insurance products
to be projected. The Conventional library is focused on the product features
common in the UK and is also applicable in other markets such as Australia and
South Africa. The International library is focused on the features common in
continental European markets except for the German and French markets for
which specific libraries are available. You will have been supplied with the library
which is most appropriate to meet your needs. In general, the instructions are
the same for both the Conventional and International libraries but where they
differ separate instructions are given. The tutorial is not suitable for use with the
German and French libraries.
Pre-requisites
Although you can start this tutorial straight away it is recommended that to get
the most from this tutorial you first spend some time reading Chapters 3 and 4
of the Prophet User's Guide.
How this tutorial is organised

The tutorial is set out in a number of lessons each of which can be regarded as
separate. You can take a break at the end of any lesson. However, the lessons
need to be tackled in the specified order as each lesson uses and depends on the
results from the previous lessons.
2 Introduction
The tutorial is divided into the following lessons:
1. Setting up a simple product

In this lesson you set up a simple Prophet "product". Products are the
central components of Prophet and contain the formulas and inputs used
to model each insurance policy.
2. Setting up test model point files and tables

This lesson introduces you to the Prophet Table Editor. You set up some
policy data to be used by the product specified in Lesson 1. You also set up
the tables it uses.
3. Setting up, running and reporting on a product

In this lesson you first set up a run setting to project the product specified
in Lesson 1. You then execute the product using the data and tables set up
in Lesson 2. Finally you look at the results from within Prophet.
4. Reporting on dependencies in Diagram view

In this lesson you use Diagram view to inspect the formulas used in your
product and the dependencies between them. This facility is useful both
for understanding how the formulas interrelate and for debugging
purposes.
5. Maintaining an actuarial library and updating the product

In this lesson you are introduced to the processes involved in updating the
underlying library. You add a new variable to the library and update your
product to use it. You also make a number of further changes to your
product so that you are introduced to some more Prophet features.
6. Further topics
In this lesson you learn about a number of further features of Prophet such
as Regenerate and Auto-Scan.
Conventional product input files and results

International product input files and results
These two sections contain copies of the various listings and printouts that
you produce as you go through the tutorial using either the Conventional
or the International library.
You can compare your outputs with these copies to check your work and
to help you diagnose any problems that may arise during the tutorial.
3
L E S S O N 1
Setting up a simple product
In this lesson you will start Prophet and use it to set up a Prophet product to
carry out the calculations for an insurance product.
Topics covered in this lesson

• Details of the product 4
• Starting the tutorial 6
• Product Design view 8
• Creating the product 11
• Selecting the indicators 13
• Specifying the input variables 17

4 Lesson 1 Setting up a simple product
Details of the product

This section sets out the details of the product that you are going to model in the
tutorial. This product is a simple one which has been chosen because it can be set
up using either the Conventional or the International library. You should note
that the tutorial is primarily concerned with showing you how to use Prophet. It
does not address actuarial issues such as the appropriateness of the calculations
for any specific company or country.
Benefits The product is a non-profit endowment, so there is a guaranteed sum assured

payable on death or maturity.
A surrender value of half the premiums paid, accrued with 5% interest p.a., is
payable in the first two years. After that, the surrender value is equal to the net
premium reserve using 100% of the mortality table AM80 Ultimate for the
Conventional product and GKM80 for the International product and an interest
rate of 5%.
Premiums Premiums may be paid annually, half yearly, quarterly or monthly.
Expenses Initial expenses are currently 160 per policy. Renewal expenses are currently 24 per
policy per annum and are expected to grow in accordance with the Consumer Price
Index (assumed to be 4% per annum).
Commission The office pays an initial commission as a percentage of the first year's premiums,
according to the following table. This is paid in full on inception with “clawback” if
the policy lapses before 2 years premiums have been paid in the case of the
Conventional product and 1 year in the case of the International product.
Commission rates for intermediate numbers of years are obtained by interpolation.
Renewal commission of 3% of premiums is paid after the first year.
Policy Term in Years Initial Commission %
5 10
10 25
15 35
20 - 30 40
Details of the product 5
Taxation For the Conventional product you will assume that the office is a mutual. Hence,
taxation will be on an "investment income minus expenses" basis with tax rates
assumed to continue at current levels, that is 20% on franked investment income
and 25% on other income less expenses.
For the International product profits are taxed at 33%.
Reserving The net premium method is used for reserving purposes, using 100% of the
mortality table AM80 Ultimate for the Conventional product and GKM80 for the
International product, and an interest rate of 3%. A Zillmer adjustment is not used.
The product will include a solvency margin. You will use the European solvency
margin requirements, namely 4% of the reserves and 0.3% of the sum at risk.
Mortality The current mortality experience is 85% of the mortality table AM80 Select for the
Experience Conventional product and 85% of the mortality table GKM80 for the International
product. This is expected to continue.
Lapses At present, lapse rates are as set out in the following table and this experience is
expected to continue:
Years in Force Lapse Rate (%)
≤1 10
≤3 7.5
thereafter 3
Future The company expects to earn 7% gross on equities (made up of 3% income and 4%
Investment growth) and 5% gross on fixed interest government stocks (all made up of income).
Earnings The product is backed 75% by equity type investments and 25% by fixed interest
type investments. 15% of the equity type investments are assumed to be realised
each year, with reinvestment into similar investments.
Discount Rates Future profits will be discounted at three different rates of 6%, 8% and 10% to put a
value on the business.
Projection Data The product will be run using policy data as at 31 December 2002.
Starting the tutorial

In order to run the tutorial you need to have Prophet installed on your PC. If this
is not the case you should refer to the Installing Prophet chapter in the User's
Guide.
To start Prophet you should click the Start button and point to Programs. You
should then select the Prophet 7.2 program group and then click on the Prophet
option. The Prophet logo screen appears for a few seconds and you are then
normally presented with the following dialog, although it may appear differently
or not at all depending on how user permissions have been set up for your
installation of Prophet:
Enter your name in the space provided. The user name can contain between one
and 24 characters. It identifies you to other users running Prophet if they attempt
to open a workspace you are currently using. You may also need to enter a
password.
Click OK and you will see the following dialog:

Starting the tutorial 7
Select Create a New Workspace Using Standard Libraries to create a new

workspace to use for the tutorial. Also select the Product Design View option in
the Display section. Click OK and you will be presented with the following dialog:
You can now type the desired location or browse to it. It is recommended that
you use C:\PROTUTOR. Also, do not choose the option to Install Example Model
Office.
Click OK and after a short delay the Product Design view window will appear.
Product Design view

Product Design view is generally used when you are creating or maintaining a
single product. It provides a structured approach to product design and allows
you to access all the objects related to the product.
Product Design view appears similar to the following except that the entries will
initially be blank:
Take a look at the top line of buttons in Product Design view. They allow you to
set up and maintain the files and tables that will be used by your products:
• Model Point File: This file contains all the policy specific information, for
example the age at entry of the policyholder.
• Global File: This file contains information which is the same for every
product in that run, for example the consumer price index inflation rate.
• Parameter File(s): These files are used for the product specific information,
which is the same for all the policies of a particular product, for example the
annual renewal expense per policy for each product.
Product Design view 9
• Unit Prices File: This file contains the prices of all the units to which
products may be linked.
• Tables: This allows you to access all the other types of tables that may hold
information for the product. These include mortality, year dependent
mortality, generic and year index tables.
Now look at the next row of buttons:
• Library: A library contains the variables and formulas necessary to profit test,
model or value a wide range of products.
• Product: A product is a set of variables specifying the calculations you need

for a particular product that you sell, such as a with profit endowment or an
annuity.
Arrows on the Product Design view show how the information in the tables and
the library feed into the product. You can think of this view as being an active
flow diagram of the inputs and outputs from a product.
• Run: The Run button allows you to run the product to calculate the results for
each of the model points in the model point file.
• Diagram: This provides a schematic way of displaying the definition for each
variable in the product, including the relationships between different variables.
This tool is especially useful for debugging purposes. You can also use this
type of view while you are specifying the variables for a product.
The final row of buttons allow you to look at the results produced in a run and
how they were obtained or where it went wrong.
• Run Log: Displays a log of what happened during the run.
• Results: Enables you to display and print your results.
• Error Log: Provides details of any errors in the run.
At the bottom of the window there are two sections which allow you to specify the
information needed for a run:
• Structure: A structure specifies a combination of products, accumulations

that you wish to run as a single activity.
• Run Setting: A run setting specifies a number of parameters to control a run.

You will also have to specify locations for the tables that will be used in a run
and the run numbers that will be used.
The buttons down the right hand side provide the following options:
• Open: allows you to amend an existing product (you can also use the Product
button to do this).
• New: allows you to create an entirely new product, table or model point file.
• Delete: allows you to delete an existing product.
• Copy: allows you to create a new product based on an existing one. This is
useful if you need to create a new product which only has a few differences to
one that has already been created, although it is often better to enhance the
existing product in these circumstances and then to use a Same As product
(Same As products are described in the next section).
• Grouping: allows you to specify model point groupings for the product. This
aspect is covered in Lessons 11 and 12 of the Model Office Tutorial.
• Help: provides context sensitive help for Product Design view.

Creating the product 11
Creating the product

To create a new product click on New in the Product section. The following
dialog is then displayed:
The product Name has to be six letters long. The first letter in the product name
refers to the library which is being used and cannot be changed. If you are using
the Conventional library, the first letter of the product must be a C. For the
International library the first letter must be I. For the rest of the Name, type
_ENDT. That is, the name is either C_ENDT or I_ENDT.
For Description, enter Tutorial Product. This gives a description to help you
identify the product.
Library allows you to select the library to be used for the product. It will have
been automatically set as soon as you entered the first letter of the product name.
Same As allows you to specify that a product is the same as another product. In
this case Prophet would carry out exactly the same calculations as for that other
product, but it uses its own model point file, its own name when accessing
parameter file(s) and produces its own results. Hence you do not need to specify
the calculation rules separately. You should not select this option for the tutorial
product.
Level Number allows you to specify the order of processing of products and
accumulations. You should retain the default of 10.
Use in memory dynamic/stochastic calculations allows you to perform dynamic

runs in memory to speed up the calculations. You should not select this option for
the tutorial product.
Apply strong t-limiting allows you to optimise the calculated time periods in
dynamic runs. You should not select this option for the tutorial product.
Use a separate calculation array for each model point allows you to specify that
each variable for each model point has its own array in memory. This option is
not available for the tutorial product.
When you have completed the dialog box click OK.

Selecting the indicators 13
Selecting the indicators

When you have completed the Product Properties dialog and clicked OK you are
presented with the Select Indicators dialog:
The dialog shown above is for the Conventional product but the one for the
International product is similar.
The indicators define the broad outline of the product and are used to determine
which variables are brought into the product. This can be best explained with a
simple example:
An indicator is associated with a particular feature you want your product to

have, for example a regular premium policy would require the indicator
REG_PREM. By choosing this indicator you will be provided with those input and
core variables required to model a regular premium product. If you don't select it
you will be provided with the variables to model a single premium product.
The indicators therefore specify the broad scope of the product and limit the
variables provided to you to only those required for the product.
Note the following:
• In the right hand list all the indicators currently selected for this product are
shown together with their description. For a new product these are the
indicators that are selected by default.
• The middle list contains the indicators not currently selected for the product.
By highlighting an indicator and clicking on > you can select an indicator and
move it to the selected list on the right.
• The outline on the left displays a categorisation of the indicators. If you click
on one of those, for example "H-Product Types", only those indicators
associated with this category will be displayed.
• Each indicator has a code which starts with a letter followed by a 2 digit
number. The letter specifies the indicator category to which the indicator
belongs. It is these categories which are listed in the outline. The number
orders the indicators within each category.
• You can drag the horizontal scroll bars across to display these codes. You can
also drag the divider which separates the outline on the left and the middle
pane of available indicators.
• The bottom panel displays the actuarial documentation for the indicator or
indicator category which is currently selected. This explains the purpose of
each indicator and the features that it will cause to be included in the product.
• If you click Wizard in the bottom left corner an Indicator Selection Wizard is
displayed which makes it easier for you to see the documentation for each
indicator and to select the indicators that you require.
Default So take a look at the indicators selected by default:

Indicators
Indicator Description
ALWAYS Used to bring in variables that are required in every product, for
example the age at entry and policy term variables.
PROJ Used to project both business that is already in force and new
business. It brings into the product variables which define, for
example, the expired duration and currently declared bonus (if
the product is with-profit). If this indicator is not selected, then
these variables are not included and only new business can be
projected.
Selecting the indicators 15
Indicator Description
REG_PREM Used if premiums are to be paid regularly (that is the product is

not a single premium contract).
ENDOWMENT Used for an endowment type product. If you wish to model a
different type of product, then you would deselect the
ENDOWMENT indicator and select a different indicator (for
example WHOLE_LIFE for a whole life contract).
SURR_VALUES Used if a surrender value is payable on early termination of the
policy. If it is not selected, then it is assumed that no surrender
value is paid if the policy lapses (as would be the case for a term
assurance product).
OTAX_ON_I_E The tax indicator selected by default for a new Conventional
business product. It is used if the tax payable by the office is
based on a percentage of investment income and realised
chargeable gains less relievable expenses and annuity payments.
This is the basis that applies to life business in the UK.
OTAX_ON_PROF The tax indicator selected by default for new International
products. It is used if the tax payable is calculated as a percentage
of gross profit.
ONE_VALBASIS Used if the same valuation basis is applied to the attaching bonus
(if with-profits) and paid-up policies (if specified) as is applied to
the basic benefit.
DISC_PROFITS Should be used if you require Prophet to calculate the discounted
value of future profits. It allows the discounting to be at three
different interest rates.
Selecting an For the tutorial product you should also select the SOLV_MARGIN indicator. To
additional select this indicator, go down to it in the Available Indicators list and double click
indicator on it.
A more convenient way is to click "Q - Solvency Margin" in the outline. Now only
the indicators associated with this category are shown, which in this case will only
be the SOLV_MARGIN indicator. If you click Wizard the Indicator Selection
Wizard will be displayed. You will be able to see how there is one step for each of
the indicator categories. You can select or deselect an indicator using the
appropriate checkbox. This makes it much easier to select the indicators you are
interested in. Click Finish to return to the Select Indicators dialog.
If you click "All Indicators" then all the indicators that are selected for this
product will be displayed in the right hand list. For more information on all of the
indicators, you should refer to the relevant chapter of the Conventional or
International Manual or to the actuarial documentation in the bottom pane.
Click OK to accept the list of indicators.

Specifying the input variables 17
Specifying the input variables

The following window is now displayed:
In order to produce this list of input variables Prophet has scanned the library
and brought into the product all the input variables with default definitions that
match the indicators selected. Input variables are those which need to be defined
for each product. At a later stage, “core” variables will be added to the product to
complete the specification of the calculations. Core variables are not displayed
because their definitions apply across all products.
To explain the concept of input variables more clearly, it is useful to look at the
definitions of the variable MAT_BEN_PP (maturity benefit per policy). You should
click on the Library button in the bottom right corner. When the list of variables
in the library is displayed you should type the letters MAT in quick succession to
select MAT_BEN_PP.
Note: If the variables are not in alphabetical order click on the Name column first
to re-order them
You should then click on Swap View so that you can see all the details for the
variable on the screen at the same time. You will see that there are two definitions
(four for the International library). The definition that is brought into a product
depends on the combination of indicators selected.
Your chosen combination of indicators will bring in the formula definition

SUM_ASSD_PP(t), that is the sum assured. This is the default definition for a
non-profit product. Once brought into the product it may be amended if
required. Click Close to return to the product variables window.
Naming convention of variables

Before you begin to define the variables within the product it is worthwhile
explaining a few Prophet conventions for the last few characters of variable
names:
End characters Description
_PC Indicates that the variable takes values entered as a percentage,

so 3% would be entered as 3. For example, VAL_INT_PC.
_M Indicates that the variable takes values entered as months, so 3
years would be entered as 36. For example, INIT_PER_M.
_Y Indicates that the variable takes values entered as years. For
example, POL_TERM_Y.
_PN Indicates that the variable takes values entered as a proportion,
for example from a mortality table. For example, Q_EXP_PN.
_IF Indicates that the variable takes values entered for in force
business. For example, NO_POLS_IF.
_PP Indicates that the variable takes values entered as per policy
amounts. For example, MAT_BEN_PP.
Defining the variables in the product

You are now in a position to begin entering definitions for these variables so that
they reflect the product details listed earlier in this lesson.
If you take a look at your screen, you will see in the middle pane some of the
variables that have been selected for this product. All of these need to be looked at
and accepted or changed. This is the part where the product really gets defined.
To look at the default definition for a variable just click on it and the definition
appears in the bottom pane. You can drag the divider up if it is not fully visible.
You can go up and down the list and define variables in any order. However, for
a new product it is sensible to define them in variable code order which is the
order in which they always appear when you first open a product. You can re-
order them by clicking on any of the column headings. To change the definition
of a variable, either select it and click Open or double click on it.
As with indicators, each variable is assigned to a category by its variable code.

This code is made up of two letters followed by a two digit number. The outline
on the left of the screen initially just shows the description for the first letter of
the category. However, if you click on one of the plus signs it will open up to
show the descriptions for the two letter categories.
In the following sections you will specify the input variables within each of the
categories.
General First click on Open for the variable AGE_AT_ENTRY (age at entry). You will then
variables be presented with the following screen:
The default definition for AGE_AT_ENTRY is Model Point. This means that
when the product is run, Prophet will read the value to be used for this variable
from the model point file that you will set up for this product. This file will
contain lines to represent different policies. Each line may represent an individual
policy or it may represent a number of policies that have been grouped together.
You should accept this definition and move to the next variable in the product by
clicking Next. As part of this process Prophet checks the definition for any syntax
or similar errors.
The next variable is SEX (sex). This also has a default definition of Model Point
and can be accepted.
The next two variables, ENTRY_YEAR (year of entry) and ENTRY_MONTH

(month of entry) have formula definitions. There is no need to change these.
POL_TERM_Y (policy term in years) is defined as a Model Point. Accept the

default definition of zero for ADD_TERM_M (additional term in months).
The default formula definition of ANN_PREM_PP (annual premium per policy)

can be accepted. This formula would need to be changed if the product had
increasing premiums. You can accept the default Model Point definition for
ANNUAL_PREM (annual premium).
Note: You will often get pairs of variables structured like ANN_PREM_PP and
ANNUAL_PREM. The variable ANNUAL_PREM is a normally given a model point
definition which specifies the current or original premium whereas ANN_PREM_PP
is given a formula definition which can be used to specify how the premium varies
over time.
The variable PREM_PAYBL_M (number of months premiums payable) should be

defined as a Model Point. To do this, click Change Type and you will see the
following dialog:
Select Model Point and click OK. Click Next to move on to the next variable.
PREM_FREQ (premium frequency) should also be defined as a Model Point.
You should accept the default definitions for SUM_ASSD_PP (sum assured per
policy) and SUM_ASSURED (sum assured).
There now follows a variable that relates to new business projections:
Variable Description
SALES_FACTOR A multiplier factor for future sales
The default definition of this variable should be accepted - it will not be used by
this product.
Benefits You can accept the default definitions of the next two variables:
DEATH_BEN_PP The death benefit per policy.

MAT_BEN_PP The maturity benefit per policy.
The default definition for SURR_VAL_PP (surrender value per policy) needs to be
amended to allow a surrender value of half the premiums paid accrued with
interest to be paid in the first two years.
The first two lines of the formula need to be changed to:

IF t <= 23 THEN
(SURR_VAL_PP(t-1) + PREM_INC_PP(t) * 0.5)
* (1 + SURR_INT_PC/100)^(1/12)
that is the surrender value at the end of month t is equal to the surrender value at
the end of month (t-1) plus half the premium paid in month t, accrued with
interest.
The variable t (time) runs in months from 0 immediately prior to the issue of the
policy up to the end of the policy term.
This formula introduces some of the syntax available for formulas as well as some
"best practice" guidelines when entering formulas using Prophet:
• t (time) is normally entered in lower case type.
• Although excess spaces in the formula are ignored, for readability you should
indent the code below IF and ELSE lines by two spaces.
To amend the formula type the changes directly into the formula. However,
instead of typing SURR_VAL_PP in full, you can also type SUR and then press
F3. Prophet will list all the variables that begin with SUR. Click on
SURR_VAL_PP and then on OK to select it. Press OK to accept the amended
formula and return you to the list of input variables.
Prophet will not accept the definition if there are any errors in the syntax or if it
contains any invalid variable names. However, this formula includes a deliberate
mistake in the logic so that later in the tutorial you can see how Prophet handles
such errors. Can you spot it now?
Click on SURR_NETPREM (surrender net premium). You can see in the bottom
pane that it has a formula definition which references SURR_ZILLMER
(surrender zillmer). If you look at the list of variables, you will see that the list
does not include SURR_ZILLMER at the moment. However, if you now click
Open to open the variable SURR_NETPREM and click OK to accept its default
definition, you will see that the variable SURR_ZILLMER has been brought into
the list of variables. This approach whereby Prophet expands the list of variables
as you accept definitions is adopted because, if you had wanted to change the
definition of SURR_NETPREM so that it did not use SURR_ZILLMER, that
variable would have not then been brought into the product. Such variables are
called Secondary Input variables. This functionality keeps the number of input
variables to a minimum.
The interest rate at which the surrender value is calculated is 5%, so for the
variable SURR_INT_PC (surrender interest rate) click Open, type 5, delete the 0
and click OK. It would be better to define SURR_INT_PC as a parameter
definition but this allows you to practice amending a constant definition in this
tutorial.
Select the default definitions for the following variables by opening the first one
and then clicking on Next three times:
SURR_ZILMER The surrender Zillmer.

SURR_ZILL_PC The surrender Zillmer percentage.
SURR_NP_R_PC A restriction on the surrender net premium as percentage
of the annual premium.
Reserving and The next variable is NET_PREMIUM (valuation annual net premium). Click Next to
solvency accept it.
The next variable is VAL_INT_PC. This is the interest rate at which the valuation
reserves are calculated. Accept the default definition of parameter by clicking
Next, since this will allow a number of products to be run using different interest
rates.
Accept each of the following variables by clicking Next:
VAL_ZILLMER The amount of valuation Zillmer

VAL_ZILL_PC The valuation Zillmer rate
NP_RESTRN_PC The restriction on valuation net premium as a percentage
of annual premium
VAL_SUM_ASSD The value of sum assured
VAL_NET_PREM The value of net premium
UNEARNRES_PP The unearned premium reserve per policy (International
library only)
MIN_RES_PP The minimum reserve per policy
PE_DTHBEN_PP The period end death benefit exclusive of terminal bonus
and after declaration
SM_RES_PC The solvency margin as a percentage of reserve
SM_SAR_PC The solvency margin as a percentage of sum at risk
Interest rates The next five variables represent the components of the investment return.
FII_PC Annual rate of franked investment income

UFII_PC Annual rate of unfranked investment income
RCG_CHG_PC Annual rate of chargeable realised capital gain
RCG_UNCHG_PC Annual rate of unchargeable realised capital gain
UNRCG_PC Annual rate of unrealised capital gain
The actual values that should be entered will be discussed in Lesson 2 when you
set up the model point files and tables. The values of these variables (which are
essentially interest rates) may change between groups of products. For instance,
non-profit and with-profit products will usually be backed by different mixes of
assets. You will amend these variables to refer to other variables which will read
the appropriate values from the global file.
One way to do this would be to open each variable, click Change Type and then
select Formula, enter the required variable name and click OK as with
SURR_VAL_PP. However, this is not necessary since the required formulas have
already been set up as "alternative definitions". Alternative definitions are
alternatives to the default definitions and have been set up in the libraries for a
number of variables where commonly used alternatives exist.
For the variable FII_PC, click Select.
The following dialog is displayed for the Conventional product (a similar dialog is
displayed for the International product):
Click on the line:

NON PROFIT BUSINESS 5 Formula Alternative
and then click OK to accept this.
You will then see a formula which refers to the variable NP_FII_PC (non-profit
franked income rate). Click OK to accept this.
NP_FII_PC is now the next variable in the list. It has a global definition by default,
which is what you require.
Repeat the process you have carried out for FII_PC for the other four
components of investment return, always selecting the "NON PROFIT" alternative
definition.
The next variable, DISC_A_PC, is the discount rate which is applied to the stream
of emerging profits. Accept the default definition of global by clicking Next. This
allows it to be given the same value for all of the products in your model office.
There are two more discount rates, DISC_B_PC and DISC_C_PC. You should
accept the default definition of global for each of these variables.
The variable SOLV_INT_PC is the interest rate on the solvency margin and
should be changed to a global definition.
Accept the default definition of PER_TO_VAL_M (initial period to next valuation

in months).
Tax For the Conventional business product, you should also accept the global definitions
of each of the following variables:
OTAX_FII_PC The office tax rate on franked investment income

OTAX_UFII_PC The office tax rate on unfranked investment income
OTAX_RCHG_PC The office tax rate on realised chargeable gain
For the Conventional business product, you should accept the default definitions
for:
OTAX_EXP_PC Office rate of tax relief on expenses

ACQ_EXP_TAX Acquisition expenses for tax purposes
IMM_EXP_REL Proportion of acquisition expenses for immediate relief
ANN_EXP_REL Annualise expense relief 1 = Y, 0 = N
For the International business product OTAX_PROF_PC is the tax rate applied to
profits. You should accept the default global definition.
Commission The first commission variable is IC_PAYBL_PP (initial commission payable per
policy). For the Conventional business product, you can accept the default
definition.
For the International business product, you need to amend the default definition
as it currently spreads initial commission payments over the first year, depending
on the frequency of premium payments. One way to do this would be to open the
variable and change the formula to make the commission payable on inception,
but it is quicker to make use of an "alternative definition" again. Click on Select
as you did before. Select the line beginning with "INDEMNITY COMMISSION
PAID MTH1" and click OK. You will see that this is a formula paying all initial
commission in the first month. Click OK to accept this.
You are now going to use the variable IC_RATE_PC to define the initial
commission rate. The following formula defines the percentage of annual
premium that is paid as initial commission:
IF POL_TERM_Y <= 10 THEN
3 * POL_TERM_Y - 5
ELSE IF POL_TERM_Y <= 15 THEN
2 * POL_TERM_Y + 5
POL_TERM_Y + 20
ELSE
40
To enter this formula, open the variable IC_RATE_PC, click Change Type, select
Formula and type the formula in. Note that you can use Cut, Copy and Paste in
the same way as in other Windows applications. Now click OK to accept the
formula. You should note that if there was anything wrong with the syntax of the
formula, Prophet would not accept it but would instead indicate an error and its
likely position.
You have chosen this approach of using a formula to define initial commission
rates to demonstrate what can be done. A formula is only feasible if there is a
pattern in the values. In Lesson 5 you will see how these values can be entered in
a table to be read by the product.
International library users should use the alternative definition for IC_EARNL_PP
(initial commission earned on lapses per policy). To do this, choose Select, click
on the line beginning with "EARNED UNIFORMLY OVER N MONTHS" and click
Next.
Conventional library users can accept the default definition for IC_EARNL_PP.
The following variables can have their default definitions accepted:
IC_EARNL_PC The initial commission earnings rate for lapses. Only applies
to the International product.
IC_EARN_M The initial commission earnings period in months. Only
applies to the International product
IC_EARND_PP The initial commission earned on death per policy
IC_RECOV_PC The percentage of initial commission recovered on clawback
RC_PAYBL_PP The renewal commission payable per policy
The variable RC_RATE_PC (renewal commission rate) should be given a

parameter definition.
The default for the month in which renewal commission commences,

RC_START_M, is 13. Since you want the renewal commission to start in the first
month of the second policy year 13 is the correct value. You can therefore accept
the default definition.
Expenses The next variable in the list is INIT_EXP_PP, the initial expense per policy. You will
see that this is made up of three components: a fixed per policy expense, a
percentage of the sum assured and a percentage of the annual premium.
To model this product you are just using a fixed per policy expense. You should
accept the formula for INIT_EXP_PP using Next, and you will then be presented
with IE_FIXED (fixed initial expenses). Change the definition of this to a
parameter type. The defaults for the percentage of sum assured expenses and the
percentage of annual premium expenses are both 0, so accept these for IE_SA_PC
and IE_PREM_PC.
You should note that you could have deleted the two lines which refer to these
last two variables from the formula for INIT_EXP_PP in which case you would
not have had to define them as zero. This is a valid approach but it would make
the product less flexible if, in future, you want to allow for expenses as a
percentage of sum assured or annual premium.
You will see that the Conventional library formula for REN_EXP_PP (renewal
expenses per policy) is:
IF t >= RE_START_M AND t <= POL_TERM_M THEN
RE_FIXED_Y/12 * RE_INFL_ADJ(t-1)
ELSE
0
and the International library formula for REN_EXP_PP is:

+ RE_AP_PC/100 * ANN_PREM_PP(t)
ELSE
0
By looking at these formulas for REN_EXP_PP you will be able to see that the
variable RE_START_M is the month in which renewal expenses are first assumed
to be incurred. This will normally depend on how expenses are analysed in the
office. The formula is indicating that renewal expenses are incurred in each
month during the policy term in and after this "start month". Their amount
increases with inflation from the start of the projection period.
You should accept the Conventional library default definition of REN_EXP_PP.

However the International library formula has an additional line:
which allows renewal expenses to be expressed as a percentage of the annual

premium. As you are only assuming fixed renewal expenses, you could delete this
line from the formula. However, as explained for INIT_EXP_PP, this would make
your product less flexible. International library users should therefore also accept
the default definition of REN_EXP_PP. They should then accept the default of
zero for RE_AP_PC.
You should accept the default value of 2 for the variable RE_START_M, define
RE_FIXED_Y (fixed annual renewal expenses before inflation) as a parameter.
Accept the default definition of RE_INFLAT_PC (annual renewal expenses
inflation rate).
You should accept the default definitions for CPI_GTH_PC (Consumer Price
Index inflation rate) and RE_RESERV_PC (renewal expense as percentage of
reserve).
Mortality The next variable is Q_EXP_PN which is the mortality used for the experience basis.
You are going to use the mortality table AM80 Select for the Conventional product
or GKM80 for the International product. Click Browse and then select the MORT
sub-folder in your Prophet system location. For example,
C:\Program Files\PROPH_72\MORT. This sub-folder contains all the standard
mortality tables supplied with Prophet. The following dialog will be displayed:
Go to "AM80" or "GKM80" as appropriate and click Open. Now you can accept
the definition.
Note that GKM80 is an ultimate table, but the Select/Ultimate setting can be left
unchanged as Prophet will ignore this setting for an ultimate table.
You should amend PROP_EXPQ_PC, the percentage of the experience mortality

rates, to be a parameter definition type.
The next variable is Q_SURR_PN, the surrender mortality rate. You are going to
use the mortality table AM80 Ultimate for the Conventional product or GKM80
for the International product. Amend the default in the same way that you
changed Q_EXP_PN. Note that you can type in the name of the table directly, if
you know the filename.
You should accept the default definition for PROP_SURQ_PC, the percentage of
surrender mortality rates.
The default definition for the variable Q_VAL_PN (valuation mortality rates) also
needs to be changed to AM80 Ultimate for the Conventional product or GKM80
for the International product.
The percentage of the valuation mortality table used, PROP_VALQ_PC, should be

a parameter definition type, so you should amend this accordingly.
Decrements The next variable is ANN_LAPSE_PC, which is the percentage of policies that lapse
or surrender each year. You will notice from the formula as it stands that you are
allowed to enter different lapse rates in the first year; the second year; and then after
the second year. You want to amend the formula so that there are different lapse
rates in the first year; the second and third years; and after the third year. To do
this, go to the following line:
ELSE IF t <= 24 THEN
If you change the 24 to 36, then the line YR2_LAPSE_PC * YR2_LAPSE_SY will
apply during the second and the third years. Click Next when you have made this
change.
The following nine variables should have their default definitions accepted:
YR1_LAPSE_PC Lapse rate in first year

YR2_LAPSE_PC Lapse rate in second year
YR3_LAPSE_PC Lapse rate in third and subsequent years
SKEW_FACTOR Lapse and paid-up policy skewness factor
LAPSE_TIMING Lapse timing
YR1_LAPSE_SY Year 1 lapse rate sensitivity
YR2_LAPSE_SY Year 2 lapse rate sensitivity
YR3_LAPSE_SY Year 3 and subsequent lapse rate sensitivity
ANN_MAT_PC Annual maturity rate
Initial values The next variable, DURATIONIF_M (duration in force in months) should have its
default definition accepted.
The last variable, INIT_POLS_IF (initial number of policies in force) should be

given a Model Point definition.
Saving the Click OK and the list of input variables you have defined will be displayed. Click
product Save to save all the variables and definitions for the product. You might get a
warning like this:
This means you did not accept all the variables. Do not click OK because the
default definitions will then be used for all these variables. Instead click Cancel to
return to the list of input variables. You can then locate the variables which still
have a status of "Not Defined" by clicking on the Status column header so that they
all appear at the end of the list of input variables.
When you have accepted all the variables, click Save.
The following dialog then asks you if you want to delete the existing results files
for your product:
You can leave this unchanged since this is a new product without any existing
results files. Click OK to save the product.
You are now back in Product Design view. You should use the drop down list box
below the Product button to select the product that you have just created.
Printing the Click the printer toolbar icon or select the Print option in the File menu. The
product Print Product Design dialog will be displayed as follows:
This dialog can be used to print virtually any aspect of the product. At this stage
you should just select the Indicators and Input Variables options and then click
OK. Compare your output with the appropriate version provided at the end of
this tutorial.
33
L E S S O N 2
Setting up model point files and tables
In this lesson you are going to set up model point, parameter and global files for
the product you specified in the previous lesson.

• Introduction 34
• Setting up a structure 35
• Setting up the model point file 37
• Setting up a parameter file 41
• Setting up a global file 44

34 Lesson 2 Setting up model point files and tables
Introduction
Model point files contain the policy data that is used as a starting point for
Prophet's calculations. Each model point can represent an individual policy or a
group of policies. In the latter case each model point contains values that overall
represent a tranche of business. Model point files are normally set up using either
the Table Editor in Prophet or the Data Conversion System.
Parameter files contain values for all variables where the same value applies across
all the model points of each product, but for which different values can apply to
different products. A good example would be lapse rates, where different types of
product may have different lapse profiles.
Global files contain values for variables where the same value applies across all
products and model points in your model office. A typical example would be the
risk discount rate, which you would want to keep the same over the whole
company.
For more information about tables refer to Chapter 6 of the User's Guide.
In this and subsequent lessons, when a product name is to be entered, or a library

selected, International library users should replace "C_ENDT" with "I_ENDT" and
"C Conventional" with "I International".
Setting up a structure 35
Setting up a structure
Creating a Before you set up any tables you should create a structure. You do this by clicking
structure on New in the Structure section at the bottom left of the Product Design view:
The Structure dialog is then displayed with the Products/Accumulations tab

displayed as follows:
Enter the Name as "Tutorial Structure" at the top of the dialog.

The Products list contains the products which are to be included in the structure.
To add ptoducts to a structure you click Select Products above the Products list.
The Select Products dialog is displayed:
On the left a list of all the products which can be selected is displayed. The list on
the right will show which products you select for this structure. Select C_ENDT
and double click or use to select it.
To add the product to the Products List of the Structure click OK.
The Accumulations list contains any accumulations that are specified.

Accumulations allow results from one or more products to be aggregated
together. This aspect is covered in the Prophet Model Office Tutorial and
therefore you can ignore this aspect at this stage.
In addition, options on the Configuration tab can be left at their default settings
and so can be ignored at this stage.
Saving the Click OK in the Structure dialog to save it. You should now be back in Product Design
structure view. You should then select the structure you have just created in the drop down list
box in the Structure section.
Setting up the model point file 37
Setting up the model point file

Creating the You need to create a model point file for the product in this tutorial so click New in the
model point Model Point File section to display the New Table dialog.
file
Note that the model point file is automatically given a file extension of .rpt. The
location of the file can be amended if required, but the file name must correspond to
the name of the product that will be using it.
In the Table Name text box, using the default table location, enter the name of the
model point file as C_ENDT.RPT if you are using the Conventional library.
Alternatively, if you are using the International library, enter the model point file
name as I_ENDT.RPT.
For the Conventional product the New Table will then appear as follows:
After entering the name of the model point file do not click OK but instead, to
fill the columns with the names of the variables from a product click
Initialise. For the Conventional product the dialog appears as follows:
For the Conventional product, select C_ENDT or for International product

select I_ENDT,
Click OK to open the Table Editor containing the empty model point file. All the
variables you defined as model points in your product are listed across the top as
you can see in the following screen:
Properties Now click on Properties to display the following dialog:
Enter a suitable description in the Description field (for example Tutorial Model
Point File) and click OK.
Setting up the model point file 39
Sub-product The first column in the table is headed SPCODE. This is the sub-product code and
codes is used by Prophet when it accumulates the results. Prophet will automatically sum
the results for all of the model points with the same SPCODE. This could be used
for example to make a distinction between the different ways your business is
obtained, for example through direct writing and brokers. For model office work
you will normally set SPCODE to a number between 1 and 50 for in-force business,
and to a number between 51 and 9999 for new business. The model points must be
entered in ascending order of SPCODE in the model point file.
You are just going to run one model point through the product in this part of the
tutorial, and as it will be an in-force policy, enter 1 as the SPCODE for your
model point.
Values The values of some variables have fixed ranges. For example, the variable SEX can
only take the value of 0 (for male) or 1 (for female). In such cases you can choose
whether to display the values or their descriptions.
Note that the descriptions are specified for a variable using the Variable
Constraint feature. This feature allows you to specify a description for each value
that the variable can have. For more information see Variable Constraints in the
Prophet User's Guide or in Help.
Since we will be entering values instead of descriptions the (Toggle Values /

Descriptions) button on the Table Toolbar must not be depressed. If it is, then
click the button to depress it.
Enter the values for the following variables:
AGE_AT_ENTRY This is the policyholder's age at the start of the policy. Set it
equal to 30.
SEX A value of 0 corresponds to a male life and a value of 1 to a
female life. Enter 0 here.
POL_TERM_Y This is the policy term in years. It should be set equal to 10.
ANNUAL_PREM This is the annualised premium payable. It should be set equal
to 840.
PREM_PAYBL_M This should be set equal to the policy term multiplied by 12 so
enter 120.
This is not really the recommended way, it is better to define it
as a formula in the product instead of a model point.
PREM_FREQ This is how frequently the premium is payable. If 1 is entered

here, the premium is payable yearly; 2 half-yearly; 4 quarterly or
12 monthly. This should be set equal to 12.
SUM_ASSURED This is the basic sum assured. It should be set equal to 10000.
DURATIONIF_M This is the duration of time in months that the policy has been
in force. If premiums are paid monthly, then it will be the same
as the number of premiums which have been collected. You will
assume that the contract was taken out on 1 June 1998, and so
7 months have elapsed since the contract was taken out.
Therefore this variable should be entered as 7.
INIT_POLS_IF This is the initial number of policies in force. This should be set
equal to 1.
Note that when the cursor is in a column headed by a variable name, the
description of that variable is displayed in the bottom left of the screen.
Saving the file Click on Save. Click OK to accept the file name and location.
Printing the file You should also print the table out by clicking or using the Print option in the
File menu. Compare your output with the appropriate version provided at the end
of this tutorial.
Click Close to return to the Product Design view.

Setting up a parameter file 41
Setting up a parameter file

Parameter files are two dimensional tables which contain constant values indexed
by product name and variable name.
The example used in this tutorial does not really emphasise the advantages of
using parameter files because you currently have only one product. In practice
you would normally have more than one product and so parameter files would be
used for variables whose values change across products.
Creating the To create the new parameter file you would normally click on the Parameter File(s)
parameter file button. However, to demonstrate a slightly different approach you should click New
in the Table section instead. The following dialog then appears:
Select Parameter, then click Initialise.
You will then be presented with the following dialog which allows you to select
one or more products so that the file can be set up with the names of the variables
with a parameter definition in those products:
Select your product and click OK.

Values You will be presented with an empty parameter file with all the variables you defined
as parameters in your product across the top. You can now enter the values for these
variables.
IE_FIXED This is the fixed initial expenses and should be set equal to
160.
PROP_EXPQ_PC This is the percentage of the mortality table used for the
experience that you wish to use. It should be set equal to 85.
PROP_VALQ_PC This is the percentage of the valuation mortality table that you
wish to use. It should be set equal to 100.
RC_RATE_PC This is the renewal commission rate and should be set equal
to 3.
RE_FIXED_Y This is the current rate of fixed renewal expenses and should
be set equal to 24.
VAL_INT_PC This is the valuation interest rate used for calculating the
mathematical reserves. This should be set equal to 3.
YR1_LAPSE_PC This is the lapse rate assumed to apply for the first policy
year. It should be set equal to 10.
YR2_LAPSE_PC This is the lapse rate for the second and third policy years and
should be set equal to 7.5.
YR3_LAPSE_PC This is the lapse rate for the remaining duration of the policy
and should be set equal to 3.
Saving the file Click Properties and enter the description Tutorial Parameter File. Then click OK
followed by Save and the following dialog will be displayed:
Change the File Name to PARAMET.FAC and click OK.

Setting up a parameter file 43
Printing the You should also print the table out by clicking or using the Print option in the
file File menu. Compare your output with the appropriate version provided at the end of
this tutorial.
Click Close to return to the Product Design view.

Setting up a global file

Global files are two dimensional tables that contain constant values indexed by
variable name and by run number.
Properties Click the Global File button in Product Design view to set up a new global file. The
Properties dialog will then be displayed:
Enter a description such as Tutorial Global File and type 1 in the Run Numbers
box and click OK.
To include the variables with global definitions for your product, click Add in the
Variables section. Then select your product and click OK.
Setting up a global file 45
Table Conventional library users will be presented with the following screen (for the
worksheet International business product there will only be one tax variable in the first
column):
You will notice that the table contains one column headed RUN_01.
It is possible to perform multiple sensitivity runs by entering the global values to

be used in these runs into further columns headed RUN_02, RUN_03 and so on.
Values You can now enter the following values for the variables:
CPI_GTH_PC This is the annual Consumer Price Index inflation rate and
should be set equal to 4.
DISC_A_PC This is the discount rate that is applied to the stream of
emerging profits. It should be set equal to 8.
DISC_B_PC This is the discount rate that is applied to the stream of
DISC_C_PC This is the discount rate that is applied to the stream of
NP_FII_PC This is the annual percentage rate of franked investment
income earned on the investments. As explained in Lesson 1
this contract is 75% backed with equities which provide
franked investment income. These yield an average of 3%, so
2.25 (that is 0.75 * 3) should be entered here.
NP_RCGCHG_PC This is the annual percentage rate of realised chargeable gains
and 0 should be entered here. This is because the average
growth rate of equities (4%) is the same as the inflation rate
(4%) so it is reasonable to assume that all realised gains will
be relieved against indexation allowances.
NP_RCGUNC_PC This is the annual percentage rate of realised unchargeable
gains. As you are assuming that 15% of equities are realised
each year, 0.45 (that is 0.75 * 4 * 0.15) should be entered
here.
NP_UFII_PC This is the annual percentage rate of unfranked investment
income earned on the investments. This contract is 25%
backed with fixed interest government stocks which provide
unfranked investment income. On average these earn 5%, so
1.25 (that is 0.25 * 5) should be entered here.
NP_UNRCG_PC This is the annual percentage rate of unrealised gains. 2.55
(that is 0.75 * 4 * 0.85) should be entered here.
You should note that the sum of the above five components of investment return
equals 6.5%. This is equal to (0.75 * 7 + 0.25 * 5), the overall return specified in
Lesson 1.
Setting up a global file 47
For the Conventional library product, the following tax values need to be entered:
OTAX_FII_PC This is the annual percentage tax rate on franked

investment income and should be set equal to 20.
OTAX_RCHG_PC This is the annual percentage tax rate on realised
chargeable gains and should be set equal to 25.
OTAX_UFII_PC This is the annual percentage tax rate on unfranked
investment income and should be set equal to 25.
For the International library product only one tax value needs to be entered:
OTAX_PROF_PC This is the annual percentage tax rate on profits and

should be set equal to 33.
For both products the following value needs to be entered:
SOLV_INT_PC This is the interest rate on the solvency margin. It should

be set equal to 5.
Saving the file Click Save to save the table. Accept the default location and change the name to
GLOBAL.FAC.
Print the table out by clicking or using the Print option in the File menu.
Compare your output with the appropriate version provided at the end of this
tutorial.
Click Close to go back to Product Design view.
Making Further columns and rows can be added to your tables, as required. It is also possible
changes to make use of the Table Editor formulas to add or copy data, rather than entering
individual values. For more details, refer to the "Setting up tables" chapter in the User's
Guide.
49
L E S S O N 3
Setting up, running and reporting on a

product
Now that you have created a product, its related model point, parameter and global
files and a structure in the previous two lessons, you are ready to:
• Set up a run
• Run the product
• View the results of the run.

• Setting up a run setting 50
• Running the product 58
• Identifying why a run has failed 59
• Viewing results produced in a run 61

50 Lesson 3 Setting up, running and reporting on a product
Setting up a run setting

The set up of a run involves specifying a structure and a run setting. Structures
contain information about what you want to run and run settings contain
information about how you want to run it. You can set up and maintain a number
of different structures and run settings so that you switch between them rather than
amending them. You have already set up a structure, so you now need to create a
run setting.
Click New in the Run Setting section. Select the "Calculation Run" option and
then click OK to display the following dialog:
Enter a name of Tutorial Run Setting in the Name field at the top of the dialog.
Then complete each of the items in the tabs as described in the following sections.
Setting up a run setting 51
Run Parameters tab

This tab allows you to specify the Start Date and the Future and Past
Accumulation Periods.
The Start Date is used to specify the start date of the model office projection.
The projection for the current run is to be based at 31 December 2002 so the
date should be changed to 31 December 2002.
The Future Accumulation Period is the number of years of projected results that
will be included in the results files produced by Prophet. The actual calculations
are always made from the start of the policy until at least the end of the policy
term, to ensure that items such as the discounted value of future profits are
properly calculated.
You are projecting in-force policies with a ten year policy term and wish to be
able to view the results of all the calculations, so enter 10. If you were also
projecting new business policies, you would enter 11, rather than 10, because for
a 10 year policy, the maturity proceeds are paid out in the 1st month of the 11th
year. Thus, if the policy was issued in June 2002, the proceeds are paid out in
June 2012.
The Past Accumulation Period is the number of years of results prior to the start
date of the projection that will be included in the results files produced by
Prophet. It primarily enables you to produce output for checking historic asset
share calculations. Leave the default value of 0 for the Past Accumulation Period
unchanged.
Month in which Company Year Ends is used to ensure that reporting by

company year is handled correctly within Prophet. The default of 12 should be
accepted.
The other sections in this tab are not needed in the run, so you can leave them as
they are. They are covered in the Model Office Tutorial.
Advanced options
Additional options are available when you click Advanced in the Advanced area of
the Run Parameters tab. The Advanced Settings dialog is displayed similar to the
following:
The dialog has 2 tabs:
• Run Process tab

Contains options to control the order in which products are run, specify seed
values when making stochastic runs and file creation and deletion options.
• Batch Programs tab

Allows you to specify additional programs that can be run at various points in
a run.
For the tutorial accept the default settings. Click Cancel to return to the Run
Parameters tab.
Tables tab
Click on the Tables tab of the Run Setting. The Tables tab appears similar to the
following:
Settings from this tab allow you to specify:
• The location in which the model point files for the structure are held and their
file extension.
• The locations and names of the global, parameter and prices files.
• The location of any other tables.
• The location and name of the sales file which contains assumptions about
future new business volumes.
Unless you specify the complete location including the drive letter, any location you
enter is taken relative to the workspace location.
The default location for the model point files is MPFILES, which means that, if you
have installed the tutorial on the C: drive and in the location PROTUTOR, then the
model point files will be read from C:\PROTUTOR\MPFILES. The default location
for all the other files is the TABLES location and is handled similarly.
The tutorial will use the default locations and names. As you will not be using a unit
prices file or a sales file you should ensure that these entries are blank.
Results tab
This tab enables you to specify what kind of output is to be generated in the run and
the format(s) in which it is to be produced. It appears as follows:
Results Files These options allow you to choose the type of results files that will be produced in
Prophet's own results file format:
Item Description
Projection / NB Profile These results contain projected results for each month
of the future and past accumulation periods.
Valuation These results contain the values calculated at the start
of the projection period split by maturity year or
current age.
Accumulation Results This option produces and retains the results generated
by accumulations.
Intermediate Dynamic This option produces and retains the intermediate
results generated in dynamic runs.
Select Projection/NB Profile.

Product Total Options in this area allow you to specify which Product Total Results files can be
Results Files suppressed. This can improve run times and reduce unnecessary disk space as
(00) unwanted results files are not created.
Accept the default setting to create results files for both sub-product codes and
product totals.
Variables in This option allows you to choose the variables to be retained in the results. Variables
Results Files which are defined as or evaluate to constant values are always included in the results
files. This includes all variables defined using either global or parameter definitions.
In addition, the values for the first model point of each sub-product code are
included for all variables defined as model point. You can choose one of the
following options:
Item Description
Selected Results are generated containing values for the variables in a

selected variable group. You select the variable group by clicking
Variable Group and then selecting the group from a category.
Cumulative Results will be generated which contain values for all the
variables which have had their cumulative property checked.
This will normally be all variables for which it makes sense to
sum values across model points. If a variable’s cumulative
property is checked, its values will also be aggregated across
products if accumulations are being used.
All Results will be generated that contain values for all the variables
in the product. This is most useful when you are developing
products and testing that they do the calculations you require.
Select All so that you can inspect the values of all the variables in your product.
Text Results These are basically the same as Results Files, except that the results are in a text format
Files instead of in Prophet's own results format. These results can be used in other
applications.
Do not select any Text Results files.
Individual This option allows you to specify whether output files are to be generated which
Model Point contain a line of results for each model point. If selected, individual model point
Results Files results will be produced in Prophet’s model point file format.
These files will contain the values at the projection start date (that is at t =
DUR_M) for each of the variables which have their Individual MP Output
property checked (see the "Variable Properties" section in the "Libraries" chapter
of the User's Guide for information about the properties of variables).
For the tutorial do not choose this option.
Error Control This option allows you to specify the maximum number of errors allowed before
Prophet terminates the calculations for a particular product and the maximum
number of warnings before termination of an accumulation. The default is zero
which means that the calculations for a product will be terminated if or when the
first error occurs. If you enter 10, a product will only be terminated when the 11th
error occurs. If you select the No Limit options, Prophet will continue the
calculations irrespective of the number of errors that occur.
The model point file you are using for this product contains only one model point
so you will only want results if no errors occur. Accept the default entries of zero
for both fields.
Stochastic Options in this area relate to stochastic runs and are only available if Stochastic is
selected in the Run Setting. In this tutorial the product is not being run either
dynamically or stochastically so the Dynamic and Stochastic options are not
selected.
Runtime Configuration tab

The settings in the Runtime Configuration tab enable you to specify the type of
run and how it is to be split among other PCs when Parallel PC mode is used.
The Runtime Configuration tab setting appears as follows:
For the tutorial accept the default settings.
Saving the run Click on OK to save the run setting. Then select the run setting you have just
setting created in the Run Setting drop down box.
Running the product

In Product Design view click Run.
Prophet first carries out various checks such as ensuring that all the model point
files exist for the products included in the run and that the global and parameter
files specified in the structure exist. If not a warning will be produced.
The Run Progress Information dialog is displayed.
As the run proceeds Prophet does the following:
• It recognises that you are running a new product and carries out the variable
sequencing, code generation and compiling processes needed to generate an
executable program.
• Prophet carries out the calculations for the model points and creates a file of
the sub-product results for the required variables over the specified period of
accumulation.
• The run messages which appear on the screen to show how the run is
progressing are also written to a run log file.
However, in this case, Prophet will fail to complete step 2 because of the error you
introduced (deliberately) when setting up the product. The following dialog is
displayed:
Identifying why a run has failed 59
Identifying why a run has failed

When this dialog above is displayed, the run log can be viewed by clicking
Display Runlog. To view or print the run log at any other time, click Run Log in
Product Design view.
The run log first lists the structure and run setting details followed by the dates
and times of the products and accumulations in the run. This is followed by the
details of the product generation and execution. In this case it can be seen that an
error has been detected in the variable SURR_VAL_PP at time period 0. The error
message reads:
ERROR PCR002 Time Index Error - Attempt to read outside of results
array
This is an indication that an invalid time period has been referred to.
To look at and correct the variable in question, use the Select button in the
bottom left corner to go to the Workspace Window. When the Product Design
view is displayed click on Product. The product variables window will then be
displayed. Go to SURR_VAL_PP.
Taking a look at SURR_VAL_PP, you can see that the first part of the formula
refers to itself at time (t-1). It is a "recursive" formula which is necessarily
evaluated by starting at t = 0 and moving forward one month at a time. However,
at time period 0 (when the error occurred) this formula will reference the value at
t = -1. As t can only take positive values, this term has caused the error. This can
be rectified by opening the variable and replacing the first line with:
IF t = 0 THEN
0
Click OK and then save your product. The product can now be re-run by clicking
on Run.
Look at the run log again after the run is complete by selecting it using the Select
button and then clicking the toolbar button to update it. You should now see
that the product has been run successfully. Then close the run log window by
clicking on Close.
Viewing results produced in a run 61
Viewing results produced in a run

The run has been completed and the results stored on the hard disk. To look at
the results, you first have to specify the three characteristics that are located
below the Results button.
• Run Number should be 1, because this is the only run number you have run
so far.
• Sub-Product gives a choice between Total Business and Existing Business.

Select Existing Business.
• Results Type can be used to choose which type of results you want to view:
Projection
New Business Profile
Valuation - Maturity Year
Valuation - Current Age
Unit Numbers
Select the Projection option

Click Results, and the following screen will be displayed:
At the top left you see the Run Number, the Sub-Product and Type that you
selected together with the name of your product. If you want to change one of
these selections, you just use the appropriate drop down list and make a selection.
The results on the screen will change straight away.
Variable In the Variable Group section there are Category and Name options. Using the drop
Groups down list next to Category you will see a number of variable group categories and
three additional options. The three additional options allow you to select All
Variables, Cumulative Variables or Key Output Variables.
Each variable group category contains a number of variable groups which allow
you to report on a particular aspect of the results. The standard workspace
includes a number of variable groups which are listed in the Name drop down list.
If you select a variable group category the drop down list next to Name is opened
so you can select the required one.
If you want to create a new variable group or to change an existing one, you can
do this by selecting the Variable Groups option in the Workspace menu.
Conventional library users should select the A10 - Revenue Account / Profit Test
variable group and International library users should select
A11 - International Rev Acct / Profit Test.
Time Periods To specify the Time Periods for which the results are displayed, click on the Time
Periods button. The following dialog will then be displayed:
Start Position allows you to display the results from the start of the results or
from a specified start year.
Format allows you to display the results in Company Year or Policy Year format:
• Company Year displays the time periods in the form Dec 2002, 4Q2002,
2H2002, 2002 and 2002-2006. It is more appropriate when you are using
Prophet for model office work.
• Policy Year displays the time periods in the form M12, Q4, H2, Y1, Y1-Y5. It
is more appropriate for product development work.
You can choose to display your results Monthly, Quarterly, Half-Yearly, Annually
and/or 5-Yearly for a specified number of years. If for example you choose 2 for
monthly, then monthly values will be displayed for 2 years. You can also choose
to display a summary of the results for each year by checking the Show Annual
Summary box.
Complete the Time Periods dialog as follows:
Item Do this
Start Position Select Start of Results

Format Select Company Year
To End of Results Select Annually
Number of Years Enter 1 in Monthly
Show Annual Summary Select
Then click OK.
Results The remaining body of the results window displays the results. It is divided into
three tabbed sections:
• Values for time-dependent variables
• Constants and other non time-dependent variables
• Audit information
You can change the format for the display of the results using the options in the
Format menu.
You can also choose to display either the variables or the time periods as the
columns. To switch between them click on the Swap button in the corner of the
grid of values. For the tutorial, set the display so that the variables are in columns
and the time periods are in rows.
Copying If you want to copy results, for example to Microsoft Excel or Word, you can use
Results Copy in the Edit menu to copy a selected range of cells or Copy Grid in the Edit
menu to copy the entire grid of values including the top and left borders to the
Windows clipboard.
Printing To print the results choose Print in the File menu. The following dialog is displayed:
results
Select the "Grid Values", "Constant Values" and "Audit Information" options and
then click OK to print the results. Check and compare the printed results with
those at the end of the tutorial.
Then click Close to return to the Product Design view.

67
L E S S O N 4
Reporting on dependencies in Diagram

view
This lesson describes the main approach that you should adopt to check the
calculations and, if required, to modify them.

• Introduction 68
• The main Diagram view window 69
• Using Diagram view to identify how to change the product 72

68 Lesson 4 Reporting on dependencies in Diagram view
Introduction
Diagram view allows you to view all the variables and formulas in a product, the
dependencies between the variables and their values.
You will use it to:
• Check some of the variable dependencies in the product
• See how some of the changes you need to make to the product should be
implemented.
The main Diagram view window 69
The main Diagram view window

To load Diagram view, click Diagram in Product Design view. The Diagram view
window will then be displayed as follows:
The screen is divided horizontally into three sections:
• Variable dependencies
• Variable definition
• Results values
You can adjust the size of any pane by dragging its borders. You can also expand
the panes to the whole width of the screen by clicking on the small black arrow to
the right of the panes.

Variable dependencies
The centre pane of the top section shows the direct relationships between the
current variable (MATH_RES_IF) and other variables in the product. Clicking on
any variable in this pane will make that variable the current one. The current
variable is also displayed in the second drop-down menu in the toolbar at the top
of the screen.
You can make any variable in the product the current one by selecting it in the
Variable drop-down menu. If you type in the first few letters of its name in quick
succession, the first variable starting with those letters will be highlighted.
The left hand pane of the top section enables a tree view to be displayed of the
variables on which the current variable depends. Any variable with a plus sign
next to it may be clicked to expand the tree.
The right hand pane of the top section enables a tree view to be displayed of the
variables that depend on the current variable. Any variable with a plus sign next to
it may be clicked to expand the tree.
Variable definition
The middle section displays the name, description, type, variable code and
definition of the current variable. For non time-dependent variables the value is
also displayed in this section. In the case of model point variables and other non
time-dependent variables that have values that vary from model point to model
point the value for the first model point of the current sub-product is displayed.
If you move the mouse pointer over any variable in the top section, Diagram view
will display information about that variable instead of the current one.
Results values
The three panes in the bottom section show the values of time-dependent
variables in your product. The centre pane shows the values of the current
variable. The left pane shows the values of the variables on which the current
variable depends. The right pane shows the values of the variables that depend on
the current variable.
The main Diagram view window 71
Options
There are a number of options in Diagram view which enable you to change the
way in which the information is displayed:
• If you select Font, Number or Time Periods in the Format menu you are able
to change the font, number format and time periods used to display the
results.
• If you select Suppress Zeros in the Format menu you are able to suppress
variables which have zero values.
• If you select Options in the Tools menu and then the Diagram tab you can
specify which types of variables are highlighted and in which colours. You can
also specify whether the three results panes should be synchronised or
whether you can scroll each one independently.
• You can move backwards and forwards through a history of the variables that
you have selected as the current variable using the and toolbar buttons.
• You can change the product and the results which are displayed using the
drop down list boxes at the top of the window.
• You can print out the Diagram view screen using the Print toolbar button or
the Print option in the File menu.
• You can click on the Chart Window button to diplay the results graphically.
Note: You should now spend some time moving through the variables in the
product you have created, exploring the dependencies between them, and using
some of the options available to you.
Using Diagram view to identify how to change the

product
In the next lesson you will make the following enhancements to the tutorial
product:
• Valuation Interest Rate - you will amend the product to use different
valuation interest rates depending on the valuation series to which each model
point belongs.
• Mortality Experience - you will use the variable SEX to assign different
mortality rates to males and females.
Diagram view can help you clarify exactly which variables should be changed to
make these two enhancements.
Valuation interest rate

The valuation interest rate is represented by the variable VAL_INT_PC. In
Diagram view use the Variable drop down menu to make VAL_INT_PC the
current variable. Looking at its dependencies, you can see that it is used only in
the variable M_VAL_INT, which in turn is only used in the valuation commutation
functions. You will change VAL_INT_PC to use a different valuation interest rate
depending on the valuation series. This will be done in the next lesson by creating
a new variable VALN_SERIES to determine which valuation interest rate is used.
Mortality experience
Referring to the product listing you produced earlier, you will see the input
variables for mortality in the section headed K-Mortality. You wish to change the
experience mortality to depend on sex. From the product listing, you can see that
the variable to be changed is Q_EXP_PN. Make Q_EXP_PN the current variable.
The dependencies of Q_EXP_PN are now displayed and you can see that the
mortality rates on the experience basis are only used in the variable Q_EXP. This
means that amending Q_EXP_PN will have no wider, unintended effects.
Using Diagram view to identify how to change the product 73
There are already variables set up in the library to distinguish between male and
female mortality experience. These are:
Q_EXP_MALE KA11
Q_EXP_FEMALE KA12
The best way to make the change is to define Q_EXP_PN as a formula which
picks out the correct mortality table dependent on the policyholder's sex using
these two variables. This will be done in the next lesson.
Click Close to close Diagram view.

75
L E S S O N 5
Updating libraries and products
This lesson explains how you can extend the calculations in Prophet to meet your
particular requirements by implementing the changes outlined in the previous
lesson.

• Adding a new variable to the library 76
• Updating the product 81
• Choosing a scenario which shows the effects of product changes 91
• Identifying an error in the run 93

76 Lesson 5 Updating libraries and products
Adding a new variable to the library

You are now going to add a new variable VALN_SERIES to the library. First click
Library in Product Design view. This will open the Conventional or International
library as appropriate. The screen will look like this:
You have the following five main options:
Option Description
Open Displays a list of the existing definitions for the selected variable.
New Allows you to create a new variable.
Delete Allows you to delete the selected variable.
Copy Allows you to create a new variable based on the selected variable.
Properties Allows you to look at and change the properties of the selected
variable.
Since you want to create a new variable, click New.

Adding a new variable to the library 77
The Variable Properties dialog will then be displayed as follows:
Enter the name as VALN_SERIES. Then enter the description as Valuation Series.
Leave the Type as Number.
The other items in the Variables Properties dialog are described in the following
sections.
Workspace level properties

Accounting type
• Revenue Account means that annual values for this variable will be the sum of
the twelve monthly values (for example Premium Income).
• Balance Sheet means the annual values for this variable will be the values in
the last month of the year (for example Mathematical Reserve In Force).
Select Balance Sheet.

Default printed decimal places

The normal Prophet convention is to use two decimal places for monetary values
and six decimal places for actuarial functions, interest rates etc. Enter 0 here, as
decimal places are not needed for this variable.
Constraints
You can specify the values that a variable can have by setting up a constraint
condition in the Constraints section of the Variable Properties dialog. The
constraint that you specify is then used to validate the values that you enter for
the variable in the Table Editor.
The constraints that can be specified for the variable can be one of the following:
• Specified values constraint

This type of constraint allows you to specify the values that the variable can
have, together with descriptions for each such value.
• Min / max / integer constraint

This type of constraint allows you to specify the minimum and maximum
values that the variable can have, and also whether it can only have integer
values.
A description of the type of constraint applied to a variable is listed in the

Constraints section of the Variable Properties dialog.
Leave this entry blank as we will not be applying any contsraints to the variable.
Also, as the remaining workspace level properties are beyond the scope of this
tutorial you should not select any of them.
Library level properties

Type allows you to choose between Input and Core variables.
• Input variables are used to define the specific calculations you want to make
for each of your products. When you specify a new product, Prophet presents
you with a list of input variables to be defined, based on the indicators you
select.
• Core variables contain the calculations which do not vary by product. Prophet
automatically includes the appropriate core variables with their appropriate
definition, based on the indicators you select for that product.
Adding a new variable to the library 79
Select Input for this variable.
Variable Code is a four character code which controls the order in which the
input variables are presented to you when setting up a product. It consists of two
letters followed by two digits. Any number of variables can be given the same
variable code but it is better to give them different codes so that they appear in the
order you want. The natural place for VALN_SERIES to appear would be just
after VAL_INT_PC (the valuation interest rate). If you click Browse and search
through the variables you will see that the variable code for VAL_INT_PC is FA10.
Thus you should give VALN_SERIES a variable code of FA11. This can be done
by double clicking on VAL_INT_PC. You will then be returned to the Variable
Properties dialog where you see that FA11 has been entered for the variable code.
Below the variable code you will also see the descriptions for the F and FA
variable categories.
Variable definitions
You should now click OK to go to the variable definitions window where you can
create and amend the definitions for the variable. For an existing variable you can
choose one of the definitions that already exist for the variable and change it or
create a new one. In this case the list is empty since you have just created a new
variable. Click New so that you can create a definition for this new variable.
First you have to select the type of definition you want to create. This is done in
the following dialog:
Choose Model Point and click OK.

The following is then displayed:
This screen looks similar to the variable screen you saw when specifying the
product 18. The difference is the bottom part of the screen headed Indicator
Expression. Here you can specify the indicator or the specific combination of
indicators that would bring this variable into a product. More about this topic can
be found in the "Libraries" chapter of the Prophet User’s Guide. In this case you
do not want to use this option so just click OK. This means that the variable will
only be brought into the product when it is referred to by another input variable.
You are returned to the definitions window but instead of it being empty you can
see the definition you have created, which means that you have finished creating
the variable. The next step is to change your product to use this variable. Close
this window and the library variables window, which brings you back to the
Updating the product 81
Updating the product

You are now ready to amend the product to allow for the two changes which
were described in Lesson 4. You will also create a table of initial commission rates
and amend the product to read values from this table rather than using the
existing formula.
Mortality experience
To open the product, click on Product. The following dialog is displayed:
You should normally select Yes when this dialog is displayed. Prophet will then
scan all the input variables in the library to check if any need to be added or
removed from the product. This ensures that your product reflects the changes
you have made to variables in the library. In this case clicking Yes or No has the
same effect since your new variable has a blank indicator expression and hence
will not be brought into the product until it is referred to by another variable.
However, select Yes anyway.
In the outline on the left choose "K - Mortality" and select Q_EXP_PN. You could
now edit this variable in the same manner as you did when you first set up the
product by clicking Open.
However, you can also edit the product using Diagram view. Therefore select the
toolbar button and the following screen will be displayed:
Open the variable Q_EXP_PN using the Open button and select Change Type and
then Formula.
The formula which you should enter here is:

IF SEX = 0 THEN
Q_EXP_MALE
ELSE IF SEX = 1 THEN
Q_EXP_FEMALE
ELSE
ERROR("Invalid value entered for variable SEX")
The ERROR function in the last line of this formula will cause the run to
terminate if an invalid value has been entered for the variable SEX (and if the run
has been set up to fail at the first error). The text inside the quotation marks will
appear in the run log. Note that there is a similar function called WARNING. This
function allows the run to continue but produces a warning message in the run
log.
Type in the above formula and click Next to accept it. You are now presented
with the default definition for Q_EXP_MALE.
For the Conventional business product amend the Table Name to AM80. Click
Next to accept this. For the variable Q_EXP_FEMALE you should enter the table as
AF80 for the Conventional product and click OK to go back to the Diagram view
window.
International library users should edit Q_EXP_MALE and Q_EXP_FEMALE to use

GKM80 and GKF80 respectively.
The dependencies view for Q_EXP_PN will have been updated to show the new
dependencies as follows:
Using the new formula, both male and female mortality tables are loaded into
memory at the start of a run and the appropriate values (based on age at entry)
are then read into the Q_EXP_MALE and Q_EXP_FEMALE variables. However,
only one of these variables will be used as the experience mortality for any one
model point, depending on the value of the variable SEX.
You will now enhance the formula for Q_EXP_PN to demonstrate the use of the
function READ_MORT_TABLE. It uses only one variable (SEX) rather than three
(SEX, Q_EXP_MALE and Q_EXP_FEMALE). The function READ_MORT_TABLE
has the same parameters as those that must be specified if a variable is defined as
a mortality table. These are the name of the mortality table, the age at entry
variable, select or ultimate setting and age rating. The formula which should be
entered for Q_EXP_PN is:
IF SEX = 0 THEN
READ_MORT_TABLE("AM80", AGE_AT_ENTRY, "S", 0)
READ_MORT_TABLE("AF80", AGE_AT_ENTRY, "S", 0)
ELSE
Note: International library users should use GKM80 and GKF80 respectively
instead of AM80 and AF80.
If after entering THEN in this formula you select the Function Wizard using Shift
F3 or by clicking the button on the toolbar, the following dialog is displayed:
Select the Read function category and then READ_MORT_TABLE. Click Next
and then enter the arguments required for the function. When you have done this
click Finish and the function will be entered into the formula. Then continue
entering the formula. Remember that F3 can be used to enter variable names into
the formulas.
Click OK to save the formula and return to Diagram view.
This formula does not reference the Q_EXP_MALE and Q_EXP_FEMALE

variables so they are not required in the product. Because you keyed the first
suggested approach before switching to the second method, the variables will still
be included in the product (although not visible in Diagram View) but will not be
used. Click Re-Scan to remove them from the product.
This completes the changes to the mortality experience.
Note: You can switch back and forth between Diagram view and the original list
of variables using the and toolbar buttons and the buttons to the right of
the Select button. This can be useful because you can then use the outline to help
you select the variable you want to look at. Prophet remembers which variable is
the selected one when you move between the views in this way.
When you do this you will see that the list of variables now includes the core
variables as well as the input variables. However, you cannot edit the core variables
from either of the views. This can only be done from within the library.
There are certain things that you can do in Diagram view that you cannot do when
the list of variables is displayed, such as running the product or opening the table
for a definition.
Valuation series
You have set up the variable VALN_SERIES in the library with a default definition
of model point. You will now amend the product so that if this variable takes the
value 0, the policy forms part of the old series, and if it takes the value 1 it will
form part of the new series.
To do this, you need to change the variable VAL_INT_PC. Select it using the drop
down list of variable names and click Open. Select Change Type followed by
Formula. The following formula needs to be entered:
IF VALN_SERIES = 0 THEN
2.75
ELSE IF VALN_SERIES = 1 THEN
3.0
ELSE
ERROR("Invalid value entered for variable VALN_SERIES")
Then click OK to accept this.
VALN_SERIES is now shown as being used by VAL_INT_PC in Diagram view. It

has been brought into the product as a result of your referencing it in
VAL_INT_PC. You chose to give it a model point default definition in the library
so accept this definition by opening the variable and clicking OK. You will then
be returned to Diagram view.
Generic table definition for the initial commission rate

The scale used for initial commission rates at the moment is fairly simple, and can
easily be entered as a formula. In practice, however, the scale will usually be more
complicated and so you are now going to replace the formula by a generic table.
Generic tables are in a format which can be used for many different purposes.
The changes need to be made to the variable IC_RATE_PC so go to the variable in

the list and click Open. The definition type of the variable needs to be amended,
so select Change Type, followed by Generic Table.
You are presented with the Generic Table Definition screen which appears as
follows:
Enter the options as follows:
Table/Variable This is the name of the table which Prophet uses when finding the required values
Name for the variable. You can select whether to specify the table name directly or read it
from another variable. Since we only need to use one table, leave Table Name
selected. The table has not been created yet, but you will call it INIT_COM, so enter
INIT_COM.
Time You can choose either Monthly or Annually. Select Annually so that the table is only
Allocation accessed once a year. In fact it will only be accessed once for each model point
because the value for this variable does not vary with time. Prophet allows for this
automatically.
Treat Missing Accept the default so that if a value is missing from the table Prophet treats that as
Value as Error an error rather than using a value of zero.
Index Index Variable 1

Variables This is the variable which defines what the initial commission rate depends on. It
should be set to POL_TERM_Y.
You can either type in the name or use either the drop down list box or the Insert
Variable button to select the name from a list. The main differences between the
two lists are:
1. The drop down list box includes special names such as VAR_NAME and
PROD_NAME which can only be used as index variables. These aren't
included in the Insert Variable list because they are not true variables.
2. The Insert Variable list shows the descriptions for each variable whereas the
drop down list box only shows the names.
Index Variable 2
Set this to VAR_NAME. Prophet will then use the values in the column headed
IC_RATE_PC in the generic table because this is the name of the current variable.
The Generic Table Definition should now appear as follows:
Click OK to accept the definition for this variable.
As an alternative to defining the variable IC_RATE_PC as a generic table, you

could have used the READ_GENERIC_TABLE function. If you had done this, you
would have used the following formula:
READ_GENERIC_TABLE("INIT_COM","Y",POL_TERM_Y,"VAR_NAME")
where the terms inside the brackets correspond to the entries "Table Name",
"Treat Missing Value as Error", "1st Index Variable" and "2nd Index Variable".
The first two arguments are text strings and require double quotes. VAR_NAME
also needs to be in double quotes because it is not the name of an actual variable.
Note: If for the Index Variable arguments you wish to use the values calculated for
particular variables rather than the names themselves they should not be entered in
double quotes.
For more information about the use of Prophet’s READ functions, refer to the
Help within Prophet.
Creating the generic table

You are now going to set up the generic table INIT_COM.FAC. Right click on the
IC_RATE_PC variable and select Open Table. Select INIT_COM.FAC and then
click OK when asked if you want to create the table. The following dialog is then
displayed:
Enter the description Tutorial Initial Commission Rates. Enter a value of 2 for
the Number of Index Variables.
Enter 26 in the Number of Data Rows field and 1 in the Number of Data
Columns field. Accept Table Format for the Layout. Click on OK and you will be
presented with an empty table of the required size.
Enter POL_TERM_Y as the header of the first column. Enter IC_RATE_PC as the
header of the second column. The width of the columns can be altered by
dragging the right hand edge of the column within the grey border area, or by
pressing F9 to refresh the table.
The table of commission rates set out at the start of Lesson 1 covers policy terms
of between 5 and 30 years, so you should enter all possible values in the first
column. You will have to enter the required terms in years (5 through to 30). In
the second column, enter the commission rates that correspond to each premium
paying term, interpolating where necessary.
Your final table should look as follows:
Then click Save and the following dialog will appear.
Enter the details shown to save the table as C:\PROTUTOR\

TABLES\INIT_COM.FAC and click OK.
Click Close to close this new table. Save the product, selecting the option to delete
the existing results files as you are not going to use them again and return to
Choosing a scenario which shows the effects of product changes 91
Choosing a scenario which shows the effects of product

changes
In this section you will see how the effects of the changes you have just made can
be checked.
The effect of making the mortality rates sex dependent

To demonstrate this, you should use the Table Editor to create a new model point
file based on the existing one.
Open the table C_ENDT.RPT by clicking on the Model Point File button. Then use
the Update button in the Variables section to add the VALN_SERIES variable to the
model point file. Click OK to accept the default settings for the dialog which
appears. Create a second model point by right clicking and selecting Add Row.
Then copy the values for the first model point to the second model point and enter
the following values:
Variable Model Point 1 Model Point 2
SPCODE 1 2
AGE_AT_ENTRY 30 30
SEX 0 1
POL_TERM_Y 10 10
ANNUAL_PREM 170 160
PREM_PAYBL_M 120 120
PREM_FREQ 1 1
SUM_ASSURED 2000 2000
DURATIONIF_M 79 79
INIT_POLS_IF 1 1
VALN_SERIES 0 0
The first model point represents a policy for a male, and the second represents a
policy for a female. Note that the lower annual premium for females reflects the
lower expected mortality rates.
Use Save As from the File menu to change the file name to C_ENDT.002.
The effect of the valuation series

To demonstrate this, you should add another model point to C_ENDT.002. To
add an additional row, right click and then choose the Add Row option again.
Then enter the following details:
Variable Model Point 3
SPCODE 3
AGE_AT_ENTRY 30
SEX 0
POL_TERM_Y 10
ANNUAL_PREM 170
PREM_PAYBL_M 120
PREM_FREQ 1
SUM_ASSURED 2000
DURATIONIF_M 79
INIT_POLS_IF 1
VALN_SERIES 1
Once you have saved and closed this new model point file, the product is ready to
be re-run by clicking on the Run button.
We have deliberately omitted a stage in this process in order to create an error in

the run. Can you spot it now?
Identifying an error in the run 93
Identifying an error in the run

If you look at the run log after the run has finished, you will see the error
message:
ERROR PMP008 Variable VALN_SERIES missing from model point file
This message indicates that a variable is missing from the model point file that is
being read. This has occurred because the model point file extension in the Tables
tab in the Tutorial run setting was not changed from .RPT to .002 before the
product was run.
It is good practice to look at the run log every time a product is run. However, if
you had gone straight to Results, the product C_ENDT would not have been
available for selection, as there are no results to report on.
To change the model point file extension, open the Tutorial run setting and
amend the File Extension for Model Point Files to 002 on the Tables tab. You
should now re-run the product and report on the results. You can see the effect of
the changes that were made by comparing the results for sub-product codes 1, 2
and 3.
95
L E S S O N 6
Further topics
In this lesson you will learn about some further aspects of Prophet, which should
help in your general understanding and use of the system.

• Regeneration of products 96
• Re-scanning of products (Auto-Scan) 98
• Conclusion 99
96 Lesson 6 Further topics
Regeneration of products
The regeneration option forces Prophet to regenerate the code for one or more
products, when they are included in the next calculation run. Regeneration
should be used in the following cases:
• If you have made changes in the library which only affect core variables, those
changes will only be reflected in the products when they are next regenerated.
Using the Regenerate option means that you do not have to re-scan each of
the products concerned. However, you will still need to do this if any of the
library changes affect input variables.
• If you have copied libraries and products between PCs but have not copied the
compiled product executable files.
• If a new release of Prophet has been issued which requires the code to be
regenerated before certain new features are available.
After selecting Regenerate in the Tools menu the following dialog will be
displayed:
You just select the desired products and click OK.

Regeneration of products 97
The following confirmation dialog is then displayed:
If you wish, you can elect to delete any existing results files for the products being
regenerated.
Re-scanning of products (Auto-Scan)

This option allows you to automatically re-scan products without having to select
each one individually. It has the same effect as opening each product in turn,
clicking Re-Scan and saving the product. There are two main reasons why you
might want to use the Auto-Scan option:
• To bring a new input variable into the products, where the default definition is
the required one for each product.
• To remove an input variable from products if it is no longer required.
If you select Auto-Scan in the Tools menu, the following dialog will be displayed:
You select the products in the same manner as for regeneration.

Conclusion 99
Conclusion
You have now completed the "Introduction to Prophet Tutorial" and should be
ready to tackle some real tasks using Prophet.
To learn more about Prophet:
• Work through the Model Office Tutorial

This tutorial will introduce you to a number of other features such as:
• New business processing
• Accumulations
• Summary library
• Reports
• Queries
• Prophet Excel Reporting
• Grouping of model point data in Prophet
• Work through the tutorial in the Data Conversion System and Viewer User's
Guide.
• Consult the manuals supplied with Prophet

These manuals are supplied on paper and can also be accessed from within
Prophet by selecting On-Line Manuals in the Help menu.
• Use Help
Help contains context sensitive information for all the system features of
Prophet
• Refer to Actuarial Documentation

This gives detailed information on Prophet libraries, indicators and variables.
It can be accessed by selecting Actuarial in the Documentation menu.
• Experiment with the system and the calculations you can set up
101
Conventional product input files & results
This section contains listings and results printouts for the C_ENDT product
which you should have produced as you went through the tutorial using the
Conventional library. These will help you understand and identify any mistakes
you may have made and includes:
• Product listing 102
• Model point file 109
• Parameter file 110
• Global file 111
• Results 112
102 Conventional product input files & results
Product listing
Product Listing Standard Workspace 12/09/2003

Product: C_ENDT - Tutorial Product
Product Details
Volume: Workspace: C:\PROTUTOR
Name: C_ENDT Description: Tutorial Product
Level Number: 10 In Memory Dynamic Calculation: No

Last Modified: 12/09/2003 11:55:48
Status: Compiled
Selected Indicators
Name Description Code
A - General
ALWAYS Items Always Required A10
D - Configuration
PROJ Projection of Existing Business D10
H - Product Types
REG_PREM Regular Premium Product H10
ENDOWMENT Endowment Product H20
I - Additional Benefits
SURR_VALUES Surrender Values Required I10
O - Tax
OTAX_ON_I_E Office Tax : I Minus E O20
P - Valuation / Reserving
ONE_VALBASIS One Val Basis - Basic, Bonus, PUPs P10
Q - Solvency Margin
SOLV_MARGIN Solvency Margin Required Q10
U - Profitability
DISC_PROFITS Discounted Profit Values Required U10
Input Variables
Name Description Defn Type Code
A - General
AGE_AT_ENTRY Age at Entry Model Point AA40

SEX Sex 0=Male,1=Female Model Point AA41
ENTRY_YEAR Year of Entry Formula AA60
IF SPCODE > LAST_SPCODE_FOR_EXISTING_BUS AND ENTRY_MONTH <= START_MONTH THEN
START_YEAR + 1
ELSE IF SPCODE > LAST_SPCODE_FOR_EXISTING_BUS THEN
START_YEAR
ELSE
INT((START_YEAR * 12 + START_MONTH - DURATIONIF_M) / 12)
;
; ENTRY_MONTH and ENTRY_YEAR are usually calculated from PER_TO_VAL_M and
; DURATIONIF_M. Alternatively, you can define ENTRY_MONTH and ENTRY_YEAR as
; Model Point and use the alternative definitions which are available to
; calculate the corresponding values for PER_TO_VAL_M and DURATIONIF_M.
ENTRY_MONTH Month of Entry Formula AA61

IF SPCODE > LAST_SPCODE_FOR_EXISTING_BUS THEN
12 - MOD(PER_TO_VAL_M + 23 - COM_YEAR_END , 12)
ELSE
MOD(START_YEAR * 12 + START_MONTH - DURATIONIF_M , 12) + 1
;
Prophet 1 Release 7.2

Product listing 103

POL_TERM_Y Policy Term in Years Model Point AB10

ADD_TERM_M Additional Term in Months Constant AB20
Constant: 0
ANN_PREM_PP Annual Premium per Policy Formula AC10

ANNUAL_PREM
ANNUAL_PREM Annual Premium Model Point AC20

PREM_PAYBL_M Number of Months Premiums Payable Model Point AC30
PREM_FREQ Premium Frequency 1=A,2=H,4=Q,12=M Model Point AC40
SUM_ASSD_PP Sum Assured per Policy Formula AE10
SUM_ASSURED
SUM_ASSURED Sum Assured Model Point AE21

SALES_FACTOR Sales Factor Formula AG12
1
; This variable is applied as a multiplier to the new business volumes
; contained in the sales file used for the projection.
__________________________________________________________________
E - Benefits
DEATH_BEN_PP Death Benefit per Policy Formula EB10

SUM_ASSD_PP(t)
MAT_BEN_PP Maturity Benefit per Policy Formula EC10

SUM_ASSD_PP(t)
SURR_VAL_PP Surrender Value per Policy Formula ED10

IF t = 0 THEN
0
ELSE IF t <=23 THEN
* (1 + SURR_INT_PC/100)^(1/12)
ELSE
MAX(SUM_ASSD_PP(t) * ABAR_SURR(t) - SURR_NETPREM * ADUE_F_SURR(t),0)
SURR_NETPREM Surrender Net Premium Formula ED15

IF ADUE_F_SURR0 > ZERO_TOL THEN
MIN((SUM_ASSD_PP(1) * ABAR_SURR0 + SURR_ZILLMER) /
ADUE_F_SURR0 , ANN_PREM_PP(1) * SURR_NP_R_PC/100)
ELSE
0
SURR_INT_PC Surrender Interest Rate Percent Constant ED20

Constant: 5
SURR_ZILLMER Surrender Zillmer Formula ED30

SUM_ASSD_PP(1) * SURR_ZILL_PC/100
SURR_ZILL_PC Surrender Zillmer Percentage Constant ED31

Constant: 0
SURR_NP_R_PC Restrictn on Surr Net Prem as % AP Constant ED40

Constant: 95
__________________________________________________________________
F - Reserving / Solvency / Accruals Method
NET_PREMIUM Annual Net Premium Formula FA05


IF ADUE_F_VAL0 > ZERO_TOL THEN
MIN((SUM_ASSD_PP(1) * ABAR_VAL0 + VAL_ZILLMER) / ADUE_F_VAL0,
ANN_PREM_PP(1) * NP_RESTRN_PC/100)
ELSE
0
VAL_INT_PC Valuation Interest Rate Formula FA10

IF VALN_SERIES = 0 THEN
2.75
ELSE IF VALN_SERIES = 1 THEN
3.0
ELSE
ERROR("Invalid value entered for variable VALN_SERIES")
VALN_SERIES Valuation Series Model Point FA11

VAL_ZILLMER Valuation Zillmer Formula FA11
SUM_ASSD_PP(1) * VAL_ZILL_PC/100
VAL_ZILL_PC Valuation Zillmer Percent Constant FA12

Constant: 0
NP_RESTRN_PC Restriction on NP as % of AP Constant FA13

Constant: 95
VAL_SUM_ASSD Value of Sum Assured Formula FA20

SUM_ASSD_PP(t) * ABAR_VAL(t)
VAL_NET_PREM Value of Net Premium Formula FA50

NET_PREMIUM * ADUE_F_VAL(t)
MIN_RES_PP Minimum Reserve per Policy Constant FA95

Constant: 0
PE_DTHBEN_PP Period End Death Ben for Solvency Formula FE15

SUM_ASSD_PP(t)
SM_RES_PC Solvency Margin as % of Reserve Constant FE20

Constant: 4
SM_SAR_PC Solvency Margin as % of Sum at Risk Constant FE30

Constant: 0.3
__________________________________________________________________
G - Interest Rates
FII_PC Annual Rate of Franked Inv Income Formula GA10

NP_FII_PC
NP_FII_PC Non Profit Franked Income % Global GA12

UFII_PC Annual Rate of Unfranked Inv Income Formula GA20
NP_UFII_PC
NP_UFII_PC Non Profit Unfranked Inv Income % Global GA22

RCG_CHG_PC Ann Rate of Realsd Chgble Cap Gain Formula GA30
NP_RCGCHG_PC
NP_RCGCHG_PC Non Profit Realsd Chg Cap Gain% Global GA32

RCG_UNCHG_PC Ann Rate of Realsd Unchgble Cap Gain Formula GA40
NP_RCGUNC_PC
NP_RCGUNC_PC Non Profit Realsd Unchg Cap Gain % Global GA42

UNRCG_PC Ann Rate of Unrealised Capital Gain Formula GA50

Product listing 105

NP_UNRCG_PC
NP_UNRCG_PC Non Profit Unrealised Cap Gain % Global GA52

DISC_A_PC Annual Risk Discount Rate A Global GC10
DISC_B_PC Annual Risk Discount Rate B Global GC20
DISC_C_PC Annual Risk Discount Rate C Global GC30
SOLV_INT_PC Interest Rate on Solvency Margin Global GD10
PER_TO_VAL_M Init Period to Next Valn in Months Formula GE10
6
ELSE
0
;
; This formula assumes that new business is sold 6 months before the company
; year end, for example if the company year end is December then the new
; business will be sold at the beginning of July.
;
; The formula also assumes that the start date for the projection is the
; company year end and that any bonus to be declared at the current valuation
; date is not included in the figure for the initial declared bonus in force.
; If this bonus is already included then the 0 should be changed to 12. If the
; start date for the projection is not the company year end then the 0 should
; be changed to the duration from the projection start date to the next
; company year end.
__________________________________________________________________
H - Tax
OTAX_FII_PC Office Tax Rate on Franked Inv Inc Global HB20

OTAX_UFII_PC Office Tax Rate on Unfranked Inv Inc Global HB21
OTAX_RCHG_PC Office Tax Rate on Realised Chg Gain Global HB22
OTAX_EXP_PC Office Rate of Tax Relief on Expense Formula HB40
OTAX_UFII_PC
ACQ_EXP_TAX Acquisition Exps for Tax Purposes Formula HC10

IF ENTRY_YEAR <= 1988 THEN
INIT_EXP(t) + INIT_COMM(t)
ELSE
INIT_EXP(t) + TOT_COMM(t)
IMM_EXP_REL Prop Acq Expenses for Immed Relief Formula HC20

IF ENTRY_YEAR + INT((t+5)/12) >= 1994 THEN
1/7
ELSE IF ENTRY_YEAR + INT((t+5)/12) <= 1989 THEN
1
5/7
4/7
3/7
ELSE
2/7
ANN_EXP_REL Annualise Expense Relief 1=Y,0=N Formula HC25

0
;1=Aquisition expenses are relieved in the last month of each company year.
; this basis must be used for dynamic runs from Release 5.1 onwards because
; otherwise the correct outstanding amounts cannot be passed from one
; dynamic loop to the next.
;0=Acquisition expenses are relieved monthly for each policy or model point.
; This basis always applied before Prophet Release 5.1.
__________________________________________________________________
I - Commission


IC_PAYBL_PP Initial Comm Payable per Policy Formula IB10

IF t = 1 THEN
ANN_PREM_PP(t) * IC_RATE_PC/100
ELSE
0
IC_RATE_PC Initial Commission Rate Generic Table IB20

Table Name: INIT_COM
Time Allocation: Annually
Missing Value As Error: Yes
Index Variables
1: POL_TERM_Y
2: VAR_NAME
IC_EARNL_PP Initial Comm Earned on Laps per Pol Formula IB40

IF t > 0 AND t <= 24 AND mult((t+11) * PREM_FREQ , 12) THEN
IC_PAYBL_PP(1) / (2 * PREM_FREQ)
ELSE
0
IC_EARND_PP Initial Comm Earned on Dth per Pol Formula IB60

IC_PAYBL_PP(t)
IC_RECOV_PC % Comm Recovered on Clawback Constant IB80

Constant: 100
RC_PAYBL_PP Renewal Comm Payable per Policy Formula ID10

IF t >= RC_START_M THEN
PREM_INC_PP(t) * RC_RATE_PC/100
ELSE
0
RC_RATE_PC Renewal Commission Rate Parameter ID20

RC_START_M Renewal Commission Start Month Constant ID21
Constant: 13
__________________________________________________________________
J - Expenses
INIT_EXP_PP Initial Expenses per Policy Formula JA10

IF t = 1 THEN
IE_FIXED
+ IE_SA_PC/100 * SUM_ASSD_PP(t)
+ IE_PREM_PC/100 * ANN_PREM_PP(t)
ELSE
0
IE_FIXED Fixed Initial Expenses Parameter JA20

IE_SA_PC Initial Expense as PC of Sum Assured Constant JA30
Constant: 0
IE_PREM_PC Initial Expense as Percent of Prem Constant JA31

Constant: 0
REN_EXP_PP Renewal Expenses per Policy Formula JB10

ELSE
0
RE_START_M Month Renewal Expenses Commence Constant JB15

Constant: 2
RE_FIXED_Y Fixed Ann Renewal Exp before Inflat Parameter JB20

RE_INFLAT_PC Annual Renewal Expense Inflation PC Formula JB25

Product listing 107

CPI_GTH_PC
CPI_GTH_PC Consumer Price Index Inflation Rate Global JB26

RE_RESERV_PC Renewal Expense as % of Reserve Constant JB35
Constant: 0
__________________________________________________________________
K - Mortality
Q_EXP_PN Experience Mortality Rates Formula KA10

IF SEX = 0 THEN
READ_MORT_TABLE("AM80", AGE_AT_ENTRY, "S", 0)
READ_MORT_TABLE("AF80", AGE_AT_ENTRY, "S", 0)
ELSE
PROP_EXPQ_PC Percent of Experience Mortality Rate Parameter KA20

Q_SURR_PN Surrender Mortality Rates Mortality Table KC10
Table Name: AM80
Age at Entry Variable: AGE_AT_ENTRY
Age Rating: 0
Select/Ultimate: Ultimate
PROP_SURQ_PC Percentage of Surrender Mort Rates Constant KC20

Constant: 100
Q_VAL_PN Valuation Mortality Rates Mortality Table KE10

Table Name: AM80
Age Rating: 0
PROP_VALQ_PC Percentage of Valuation Mort Rates Parameter KE20

__________________________________________________________________
L - Decrements
ANN_LAPSE_PC Annual Lapse Rate Formula LA10

IF t <= 12 THEN
YR1_LAPSE_PC * YR1_LAPSE_SY
ELSE
YR1_LAPSE_PC Year 1 Lapse Rate Parameter LA20

YR3_LAPSE_PC Year 3 and Subseq Lapse Rate Parameter LA22
SKEW_FACTOR Lapse & PUP Skewness Factor Formula LA35
1/12
LAPSE_TIMING Lapse Timing 0.5=Mid Mth, 1=End Mth Constant LA36

Constant: 0.5
YR1_LAPSE_SY Year 1 Lapse Rate Sensitivity Constant LA40

Constant: 1

Constant: 1
YR3_LAPSE_SY Year 3 and Subseq Lapse Sensitivity Constant LA42

Constant: 1


ANN_MAT_PC Annual Maturity Rate Formula LB10

IF t = POL_TERM_M THEN
100
ELSE
0
__________________________________________________________________
N - Initial Values
DURATIONIF_M Dur I/F Mths at Start of Proj Period Model Point NA10
INIT_POLS_IF Initial Number of Policies In Force Model Point NA15

Model point file
Standard Workspace Model Point file: C:\PROTUTOR\mpfiles\c_endt.rpt 16/09/2003
No of Model Points 1, No of Variables 9
Row SPCODE AGE_AT_ENTRY SEX POL_TERM_Y ANNUAL_PREM PREM_PAYBL_M PREM_FREQ SUM_ASSURED DURATIONIF_M INIT_POLS_IF
0001 30 0 10 840 120 12 10000 7 1
Prophet Release 7.2 Page 1

Model point file
109
110
Parameter file
Table Listing Standard Workspace 12/09/2003
File Name: C:\PROTUTOR\TABLES\PARAMET.FAC
PROD_NAME IE_FIXED PROP_EXPQ_PC PROP_VALQ_PC RC_RATE_PC RE_FIXED_Y VAL_INT_PC YR1_LAPSE_PC YR2_LAPSE_PC YR3_LAPSE_PC
C_ENDT 160 85 100 3 24 3 10 7.5 3

Global file 111
Global file

File Name: C:\PROTUTOR\TABLES\GLOBAL.FAC
VAR_NAME RUN_01
CPI_GTH_PC 4
DISC_A_PC 8
DISC_B_PC 6
DISC_C_PC 10
NP_FII_PC 2.25
NP_RCGCHG_PC 0
NP_RCGUNC_PC 0.45
NP_UFII_PC 1.25
NP_UNRCG_PC 2.55
OTAX_FII_PC 20
OTAX_RCHG_PC 25
OTAX_UFII_PC 25
SOLV_INT_PC 5

112
Results
Results Report: Results Standard Workspace 12/09/2003
C:\PROTUTOR\RUN_01\C_ENDT.RES 12/09/2003 11:01:38 Start Date: 31/12/2002
Run Number: 1 - Standard Assumptions Product: C_ENDT - Tutorial Product
Results Type: All Sub-Product: All
Audit Information
Product_File C:\PROTUTOR\\C\C_ENDT.PRD 12/09/2003 11:55:48

Executable_File C:\PROTUTOR\\C\C_ENDT.dll 12/09/2003 10:55:50
Results_File C:\PROTUTOR\RUN_01\C_ENDT00.PRJ 12/09/2003 11:01:40

Global_File C:\PROTUTOR\TABLES\GLOBAL.fac 12/09/2003 09:53:26
Parameter_File C:\PROTUTOR\TABLES\PARAMET.fac 12/09/2003 09:47:54
Tables_Used C:\Program Files\Proph_72\MORT\AF80.FAC 09/06/2003 6:20:00

Tables_Used C:\Program Files\Proph_72\MORT\AM80.FAC 09/06/2003 6:20:00
Tables_Used C:\PROTUTOR\TABLES\INIT_COM.FAC 12/09/2003 10:52:54
Tables_Used C:\PROTUTOR\TABLES\PARAMET.fac 12/09/2003 09:47:54
Tables_Used C:\PROTUTOR\TABLES\GLOBAL.fac 12/09/2003 09:53:26

Volume_Label C:\ =
Run_Identifier 3

C:\PROTUTOR\RUN_01\C_ENDT01.PRJ 12/09/2003 11:01:38 Start Date: 31/12/2002
Results Type: Projection Sub-Product: 1 - Existing Business
Constant Values - Revenue Account / Profit Test
Name Value Description Definition Type Code
CR_BEN_OUTGO 0.00 Critical Illness Benefit Outgo Constant WE15

ANUITY_OUTGO 0.00 Annuity Benefit Outgo Constant WE45
RIDERC_OUTGO 0.00 Rider Cost Outgo Constant WE50
CASH_BON_OUT 0.00 Cash Bonus Outgo Constant WI30
GROSS_TRAN 0.00 Gross Transfer to Shareholders Constant WI60

Results
113
114
Revenue Account / Profit Test
Description Total Office Taxable Office Non Death Benefit Surrender Maturity Total Gross Total Increase in Life Fund Tax Profit before
Premium Income and Taxable Gains Outgo Benefit Outgo Benefit Outgo Commission Gross Statutory Reserve Solvency
Income Gains Expenses Margin
Name PREM_INC O_TAXBL_INC O_UNCHG_GAIN DEATH_OUTGO SURR_OUTGO MAT_OUTGO TOT_COMM TOT_EXP INC_MATH_RES LIFEFUND_TAX PROFIT
Code WA20 WD30 WD31 WE10 WE20 WE40 WF95 WG20 WH10 WJ65 WK10
Dec 2002 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Jan 2003 0.00 3.84 3.29 0.11 3.23 0.00 0.00 2.00 -0.50 0.34 1.97
Feb 2003 0.00 3.84 3.29 0.11 3.23 0.00 0.00 2.00 -0.51 0.34 1.97
Mar 2003 0.00 3.84 3.29 0.11 3.24 0.00 0.00 2.00 -0.52 0.34 1.97
Apr 2003 0.00 3.84 3.29 0.11 3.24 0.00 0.00 2.00 -0.53 0.33 1.97
May 2003 0.00 3.83 3.29 0.11 3.25 0.00 0.00 2.01 -0.54 0.33 1.97
Jun 2003 167.81 4.29 3.68 0.12 3.63 0.00 5.03 2.01 158.93 0.25 5.81
Jul 2003 0.00 4.28 3.67 0.12 3.64 0.00 0.00 2.01 -0.50 0.43 2.26
Aug 2003 0.00 4.28 3.67 0.11 3.64 0.00 0.00 2.01 -0.51 0.43 2.26
Sep 2003 0.00 4.28 3.67 0.11 3.65 0.00 0.00 2.01 -0.52 0.43 2.26
Oct 2003 0.00 4.28 3.67 0.11 3.65 0.00 0.00 2.01 -0.52 0.43 2.26
Nov 2003 0.00 4.28 3.67 0.11 3.66 0.00 0.00 2.01 -0.53 0.43 2.26
Dec 2003 0.00 4.28 3.67 0.11 3.66 0.00 0.00 2.01 -0.54 0.43 2.26
2003 167.81 49.16 42.14 1.33 41.72 0.00 5.03 24.09 153.21 4.51 29.22
2004 162.66 54.26 46.51 1.42 46.99 0.00 4.88 24.28 147.75 5.40 32.72
2005 157.66 59.18 50.73 1.53 52.22 0.00 4.73 24.48 142.43 6.25 35.93
2006 0.00 25.46 21.83 0.65 22.78 1797.62 0.00 10.26 -1800.94 2.46 14.46
2007 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.52 0.52
2008 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.52 0.52
2009 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.52 0.52
2010 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.34 0.34
2011 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.17 0.17
2012 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Description Value Future
Prof at Disc
Rate A
Name DISC_PROF_A
Code YA10
Dec 2002 99.16
Jan 2003 97.83

Feb 2003 96.49
Mar 2003 95.15
Apr 2003 93.79
May 2003 92.42
Jun 2003 87.20
Jul 2003 85.51
Aug 2003 83.80
Sep 2003 82.07
Oct 2003 80.34
Nov 2003 78.60
Dec 2003 76.84
2003 76.84
2004 49.11
2005 15.82
2006 1.78
2007 1.38
2008 0.95
2009 0.48
2010 0.16
2011 0.00
2012 0.00

Results
115
117
International product input files & results
This section contains listings and results printouts for the I_ENDT product which
you should have produced as you went through the tutorial using the International
library. These will help you understand and identify any mistakes you may have
made and includes:
• Product listing 118
• Model point file 124
• Parameter file 125
• Global file 126
• Results 127
118 International product input files & results
Product listing

Product: I_ENDT - Tutorial Product
Product Details
Volume: Workspace: C:\PROTUTOR
Name: I_ENDT Description: Tutorial Product
Level Number: 10 In Memory Dynamic Calculation: No

Last Modified: 12/09/2003 12:49:02
Status: Specified
Selected Indicators
Name Description Code
A - General
ALWAYS Items Always Required A10
D - Configuration
PROJ Projection of Existing Business D10
H - Product Types
REG_PREM Regular Premium Product H10
ENDOWMENT Endowment Product H20
I - Additional Benefits
SURR_VALUES Surrender Values Required I10
O - Tax
OTAX_ON_PROF Office Tax : Tax on Profits O20
P - Valuation / Reserving
ONE_VALBASIS One Valn Basis - Basic, Bonus, PUPs P10
Q - Solvency Margin
SOLV_MARGIN Solvency Margin Required Q10
U - Profitability
DISC_PROFITS Discounted Profit Values Required U10
Input Variables
Name Description Defn Type Code
A - General
AGE_AT_ENTRY Age at Entry Model Point AA40

SEX Sex 0=Male,1=Female Model Point AA41
ENTRY_YEAR Year of Entry Formula AA60
IF SPCODE > LAST_SPCODE_FOR_EXISTING_BUS AND ENTRY_MONTH <= START_MONTH THEN
START_YEAR + 1
ELSE IF SPCODE > LAST_SPCODE_FOR_EXISTING_BUS THEN
START_YEAR
ELSE
INT((START_YEAR * 12 + START_MONTH - DURATIONIF_M) / 12)
;
ENTRY_MONTH Month of Entry Formula AA61

12 - MOD(PER_TO_VAL_M + 23 - COM_YEAR_END , 12)
ELSE
MOD(START_YEAR * 12 + START_MONTH - DURATIONIF_M , 12) + 1
;

Product listing 119

POL_TERM_Y Policy Term in Years Model Point AB10

ADD_TERM_M Additional Term in Months Constant AB20
Constant: 0
ANN_PREM_PP Annual Premium per Policy Formula AC10

ANNUAL_PREM
ANNUAL_PREM Annual Premium Model Point AC20

PREM_PAYBL_M Number of Months Premiums Payable Model Point AC30
PREM_FREQ Premium Frequency 1=A,2=H,4=Q,12=M Model Point AC40
SUM_ASSD_PP Sum Assured per Policy Formula AE10
SUM_ASSURED
SUM_ASSURED Sum Assured Model Point AE21

SALES_FACTOR Sales Factor Formula AG12
1
; This variable is applied as a multiplier to the new business volumes
; contained in the sales file used for the projection.
__________________________________________________________________
E - Benefits
DEATH_BEN_PP Death Benefit per Policy Formula EB10

SUM_ASSD_PP(t)
MAT_BEN_PP Maturity Benefit per Policy Formula EC10

SUM_ASSD_PP(t)
SURR_VAL_PP Surrender Value per Policy Formula ED10

IF t = 0 THEN
0
* (1 + SURR_INT_PC)^(1/12)
ELSE
MAX(SUM_ASSD_PP(t) * ABAR_SURR(t) - SURR_NETPREM * ADUE_F_SURR(t),0)
SURR_NETPREM Surrender Net Premium Formula ED15

IF ADUE_F_SURR0 > ZERO_TOL THEN
MIN((SUM_ASSD_PP(1) * ABAR_SURR0 + SURR_ZILLMER) /
ADUE_F_SURR0 , ANN_PREM_PP(1) * SURR_NP_R_PC/100)
ELSE
0
SURR_INT_PC Surrender Interest Rate Percent Constant ED20

Constant: 5
SURR_ZILLMER Surrender Zillmer Formula ED30

SUM_ASSD_PP(1) * SURR_ZILL_PC/100
SURR_ZILL_PC Surrender Zillmer Percentage Constant ED31

Constant: 0
SURR_NP_R_PC Restrictn on Surr Net Prem as % AP Constant ED40

Constant: 95
__________________________________________________________________
F - Reserving / Solvency
NET_PREMIUM Annual Net Premium Formula FA05


IF ADUE_F_VAL0 > ZERO_TOL THEN
MIN((SUM_ASSD_PP(1) * ABAR_VAL0 + VAL_ZILLMER) / ADUE_F_VAL0,
ANN_PREM_PP(1) * NP_RESTRN_PC/100)
ELSE
0
VAL_INT_PC Valuation Interest Rate Parameter FA10

VAL_ZILLMER Valuation Zillmer Formula FA11
SUM_ASSD_PP(1) * VAL_ZILL_PC/100
VAL_ZILL_PC Valuation Zillmer Percent Constant FA12

Constant: 0
NP_RESTRN_PC Restriction on NP as % of AP Constant FA13

Constant: 95
VAL_SUM_ASSD Value of Sum Assured Formula FA20

SUM_ASSD_PP(t) * ABAR_VAL(t)
VAL_NET_PREM Value of Net Premium Formula FA50

NET_PREMIUM(t) * ADUE_F_VAL(t)
UNEARNRES_PP Unearned Premium Res per Policy Formula FA52

IF t < PREM_PAYBL_M THEN
NET_PREMIUM(t) * (PREMS_PAID_M(t) - t) / 12
ELSE
0
MIN_RES_PP Minimum Reserve per Policy Constant FA95

Constant: 0
PE_DTHBEN_PP Period End Death Ben for Solvency Formula FE15

SUM_ASSD_PP(t)
SM_RES_PC Solvency Margin as % of Reserve Constant FE20

Constant: 4
SM_SAR_PC Solvency Margin as % of Sum at Risk Constant FE30

Constant: 0.3
__________________________________________________________________
G - Interest Rates
FII_PC Annual Rate of Franked Inv Income Formula GA10

NP_FII_PC
NP_FII_PC Non Profit Franked Income % Global GA12

UFII_PC Annual Rate of Unfranked Inv Income Formula GA20
NP_UFII_PC
NP_UFII_PC Non Profit Unfranked Inv Income % Global GA22

RCG_CHG_PC Ann Rate of Realsd Chgble Cap Gain Formula GA30
NP_RCGCHG_PC
NP_RCGCHG_PC Non Profit Realsd Chg Cap Gain% Global GA32

RCG_UNCHG_PC Ann Rate of Realsd Unchgble Cap Gain Formula GA40
NP_RCGUNC_PC
NP_RCGUNC_PC Non Profit Realsd Unchg Cap Gain % Global GA42

UNRCG_PC Ann Rate of Unrealised Capital Gain Formula GA50
NP_UNRCG_PC

Product listing 121

NP_UNRCG_PC Non Profit Unrealised Cap Gain % Global GA52

DISC_A_PC Annual Risk Discount Rate A Global GC10
DISC_B_PC Annual Risk Discount Rate B Global GC20
DISC_C_PC Annual Risk Discount Rate C Global GC30
SOLV_INT_PC Interest Rate on Solvency Margin Global GD10
PER_TO_VAL_M Init Period to Next Valn in Months Constant GE10
Constant: 0
__________________________________________________________________
H - Tax
OTAX_PROF_PC Tax Rate on Profits Global HB50

__________________________________________________________________
I - Commission
IC_PAYBL_PP Initial Comm Payable per Policy Formula IB10

IF t = 1 THEN
ANN_PREM_PP(t) * IC_RATE_PC/100
ELSE
0
IC_RATE_PC Initial Commission Rate Formula IB20

IF POL_TERM_Y <= 10 THEN
3 * POL_TERM_Y - 5
2 * POL_TERM_Y + 5
POL_TERM_Y + 20
ELSE
40
IC_PERIOD_M Initial Commission Period in Months Constant IB21

Constant: 12
IC_EARNL_PP Initial Comm Earned on Laps per Pol Formula IB40

IF t <= IC_EARN_M THEN
PREM_INC_PP(t) * IC_EARNL_PC/100
ELSE
0
IC_EARNL_PC Init Comm Earnings Rate for Lapses Formula IB50

IC_RATE_PC / (IC_EARN_M / 12)
IC_EARN_M Initial Comm Earnings Period in Mths Constant IB51

Constant: 12
IC_EARND_PP Initial Comm Earned on Dth per Pol Formula IB60

IC_PAYBL_PP(t)
IC_RECOV_PC % Comm Recovered on Clawback Constant IB80

Constant: 100
RC_PAYBL_PP Renewal Comm Payable per Policy Formula ID10

IF t >= RC_START_M THEN
PREM_INC_PP(t) * RC_RATE_PC/100
ELSE
0
RC_RATE_PC Renewal Commission Rate Parameter ID20

RC_START_M Renewal Commission Start Month Constant ID21
Constant: 13


__________________________________________________________________
J - Expenses
INIT_EXP_PP Initial Expenses per Policy Formula JA10

IF t = 1 THEN
IE_FIXED
+ IE_SA_PC/100 * SUM_ASSD_PP(t)
+ IE_PREM_PC/100 * ANN_PREM_PP(t)
ELSE
0
IE_FIXED Fixed Initial Expenses Parameter JA20

IE_SA_PC Initial Expense as PC of Sum Assured Constant JA30
Constant: 0
IE_PREM_PC Initial Expense as Percent of Prem Constant JA31

Constant: 0
REN_EXP_PP Renewal Expenses per Policy Formula JB10

ELSE
0
RE_AP_PC Renewal Expense as Percent of Prem Constant JB11

Constant: 0
RE_START_M Month Renewal Expenses Commence Constant JB15

Constant: 2
RE_FIXED_Y Fixed Ann Renewal Exp before Inflat Parameter JB20

RE_INFLAT_PC Annual Renewal Expense Inflation PC Formula JB25
CPI_GTH_PC
CPI_GTH_PC Consumer Price Index Inflation Rate Global JB26

RE_RESERV_PC Renewal Expense as % of Reserve Constant JB35
Constant: 0
__________________________________________________________________
K - Mortality
Q_EXP_PN Experience Mortality Rates Mortality Table KA10

Table Name: GKM80
Age Rating: 0
Select/Ultimate: Select
PROP_EXPQ_PC Percent of Experience Mortality Rate Parameter KA20

Q_SURR_PN Surrender Mortality Rates Mortality Table KC10
Table Name: GKM80
Age Rating: 0
PROP_SURQ_PC Percentage of Surrender Mort Rates Constant KC20

Constant: 100
Q_VAL_PN Valuation Mortality Rates Mortality Table KE10

Table Name: GKM80
Age Rating: 0

Product listing 123

PROP_VALQ_PC Percentage of Valuation Mort Rates Parameter KE20

__________________________________________________________________
L - Decrements
ANN_LAPSE_PC Annual Lapse Rate Formula LA10

IF t <= 12 THEN
ELSE

YR3_LAPSE_PC Year 3 and Subseq Lapse Rate Parameter LA22
SKEW_FACTOR Lapse & PUP Skewness Factor Formula LA35
1/12
LAPSE_TIMING Lapse Timing 0.5=Mid Mth, 1=End Mth Constant LA36

Constant: 0.5

Constant: 1

Constant: 1
YR3_LAPSE_SY Year 3 and Subseq Lapse Sensitivity Constant LA42

Constant: 1
ANN_MAT_PC Annual Maturity Rate Formula LB10

IF t = POL_TERM_M THEN
100
ELSE
0
__________________________________________________________________
N - Initial Values
DURATIONIF_M Dur I/F Mths at Start of Proj Period Model Point NA10
INIT_POLS_IF Initial Number of Policies In Force Model Point NA15

124
Model point file

Standard Workspace Model Point file: C:\PROTUTOR\MPFILES\I_endt.rpt 16/09/2003
No of Model Points 1, No of Variables 9
Row SPCODE AGE_AT_ENTRY SEX POL_TERM_Y ANNUAL_PREM PREM_PAYBL_M PREM_FREQ SUM_ASSURED DURATIONIF_M INIT_POLS_IF
0001 30 0 10 840 120 12 10000 7 1
Prophet Release 7.2 Page 1

Parameter file
File Name: C:\PROTUTOR\TABLES\PARAMET.FAC
PROD_NAME IE_FIXED PROP_EXPQ_PC PROP_VALQ_PC RC_RATE_PC RE_FIXED_Y VAL_INT_PC YR1_LAPSE_PC YR2_LAPSE_PC YR3_LAPSE_PC
I_ENDT 160 85 100 3 24 3 10 7.5 3

Parameter file
125
126
Global file
File Name: C:\PROTUTOR\TABLES\GLOBAL.FAC
VAR_NAME RUN_01
CPI_GTH_PC 4
DISC_A_PC 8
DISC_B_PC 6
DISC_C_PC 10
NP_FII_PC 2.25
NP_RCGCHG_PC 0
NP_RCGUNC_PC 0.45
NP_UFII_PC 1.25
NP_UNRCG_PC 2.55
OTAX_PROF_PC 33
SOLV_INT_PC 5

Results
C:\PROTUTOR\RUN_01\I_ENDT.RES 12/09/2003 15:04:28 Start Date: 31/12/2002
Run Number: 1 - Standard Assumptions Product: I_ENDT - Tutorial Product
Results Type: All Sub-Product: All
Audit Information
Product_File C:\PROTUTOR\\I\I_ENDT.PRD 12/09/2003 16:04:08

Executable_File C:\PROTUTOR\\I\I_ENDT.dll 12/09/2003 15:04:10
Results_File C:\PROTUTOR\RUN_01\I_ENDT00.PRJ 12/09/2003 15:04:30

Results_File C:\PROTUTOR\RUN_01\I_ENDT01.PRJ 12/09/2003 15:04:30
Global_File C:\PROTUTOR\TABLES\GLOBAL.fac 12/09/2003 14:31:44
Parameter_File C:\PROTUTOR\TABLES\PARAMET.fac 12/09/2003 15:04:26
Tables_Used C:\Program Files\Proph_72\MORT\GKM80.FAC 09/06/2003 6:20:00

Tables_Used C:\PROTUTOR\TABLES\PARAMET.fac 12/09/2003 15:04:26
Tables_Used C:\PROTUTOR\TABLES\GLOBAL.fac 12/09/2003 14:31:44
Volume_Label C:\ =
Run_Identifier 5

Results
127
128
C:\PROTUTOR\RUN_01\I_ENDT01.PRJ 12/09/2003 15:04:28 Start Date: 31/12/2002
Constant Values - Revenue Account / Profit Test

Name Value Description Definition Type Code
PARTSV_OUTGO 0.00 Partial Surrender Outgo Constant WE30

ANUITY_OUTGO 0.00 Annuity Benefit Outgo Constant WE45
RIDERC_OUTGO 0.00 Rider Cost Outgo Constant WE50
CASH_BON_OUT 0.00 Cash Bonus Outgo Constant WI30
INC_INIT_D 0.00 Increase in Initial Discount Constant VA59
INC_ACT_INEX 0.00 Increase in Activ Init Expenses Constant VA59
TAX_OUTGO_BB 0.00 Tax Outgo before Bonus Constant WJ30

Revenue Account / Profit Test
Description Total Office Taxable Office Non Death Benefit Surrender Maturity Total Gross Total Increase in Life Fund Tax Profit before
Premium Income and Taxable Gains Outgo Benefit Outgo Benefit Outgo Commission Gross Statutory Reserve Solvency
Income Gains Expenses Margin
Name PREM_INC O_TAXBL_INC O_UNCHG_GAIN DEATH_OUTGO SURR_OUTGO MAT_OUTGO TOT_COMM TOT_EXP INC_MATH_RES LIFEFUND_TAX PROFIT
Code WA20 WD30 WD31 WE10 WE20 WE40 WF95 WG20 WH10 WJ65 WK10
Dec 2002 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Jan 2003 70.00 3.20 2.74 0.89 5.08 0.00 -0.61 2.00 58.31 3.39 6.88
Feb 2003 69.38 3.36 2.88 0.88 6.20 0.00 -0.45 1.99 57.33 3.20 6.49
Mar 2003 68.77 3.52 3.02 0.87 7.48 0.00 -0.30 1.98 56.35 2.95 5.98
Apr 2003 68.16 3.68 3.15 0.87 8.95 0.00 -0.15 1.97 55.39 2.63 5.34
May 2003 67.56 3.83 3.28 0.86 10.64 0.00 0.00 1.96 54.44 2.24 4.54
Jun 2003 66.96 3.98 3.41 0.86 9.33 0.00 2.01 1.94 57.22 0.99 2.00
Jul 2003 66.52 4.14 3.55 0.86 11.01 0.00 2.00 1.94 56.54 0.62 1.26
Aug 2003 66.09 4.30 3.68 0.85 12.94 0.00 1.98 1.93 55.86 0.17 0.34
Sep 2003 65.65 4.46 3.82 0.85 15.18 0.00 1.97 1.93 55.18 -0.39 -0.78
Oct 2003 65.22 4.61 3.95 0.84 17.75 0.00 1.96 1.92 54.51 -1.05 -2.14
Nov 2003 64.79 4.76 4.08 0.83 20.72 0.00 1.94 1.91 53.85 -1.85 -3.76
Dec 2003 64.37 4.92 4.21 0.83 24.14 0.00 1.93 1.91 53.19 -2.81 -5.70
2003 803.49 48.75 41.78 10.29 149.40 0.00 12.27 23.37 668.17 10.07 20.44
2004 745.28 70.70 60.60 9.71 181.56 0.00 22.36 22.54 657.77 -5.73 -11.63
2005 718.50 93.50 80.14 9.61 67.89 0.00 21.55 22.61 669.34 33.38 67.76
2006 696.15 115.85 99.30 9.67 89.07 0.00 20.88 22.78 647.60 40.03 81.27
2007 674.46 137.48 117.84 9.85 110.02 0.00 20.23 22.95 626.39 46.31 94.02
2008 653.40 158.39 135.76 10.14 130.74 0.00 19.60 23.12 605.68 52.23 106.04
2009 632.94 178.61 153.09 10.55 151.24 0.00 18.99 23.30 585.46 57.79 117.33
2010 613.06 198.15 169.84 11.07 171.53 0.00 18.39 23.47 565.71 62.99 127.89
2011 593.73 217.03 186.02 11.70 191.63 0.00 17.81 23.64 546.41 67.85 137.75
2012 241.81 95.85 82.15 4.94 85.73 6853.43 7.25 9.90 -6631.99 29.88 60.66

Results
129
130
Description Value Future
Prof at Disc
Rate A
Name DISC_PROF_A
Code YA10
Dec 2002 505.39
Jan 2003 501.76

Feb 2003 498.50
Mar 2003 495.73
Apr 2003 493.58
May 2003 492.22
Jun 2003 493.38
Jul 2003 495.30
Aug 2003 498.15

Sep 2003 502.14
Oct 2003 507.51
Nov 2003 514.54
Dec 2003 523.54
2003 523.54
2004 579.21
2005 555.41
2006 515.71
2007 459.61
2008 386.57
2009 295.99
2010 187.21
2011 59.50
2012 0.00

Intro To Prophet

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Intro To Prophet

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Introduction to Prophet Tutorial

This document comprises confidential information and copyright material belonging

Copyright © 2001-2003 Deloitte & Touche LLP. All rights reserved.

Authorised by the Financial Services Authority in respect of regulated activities.

Telephone: +44 (0) 1372-820000

Document No. PR720-3001-0903

Lesson 1 - Setting up a simple product ...........................................................................3

Lesson 2 - Setting up model point files and tables.......................................................33

Lesson 3 - Setting up, running and reporting on a product.........................................49

Lesson 4 - Reporting on dependencies in Diagram view.............................................67

Lesson 5 - Updating libraries and products ..................................................................75

Lesson 6 - Further topics ................................................................................................95

Conventional product input files & results ..................................................................101

International product input files & results ...................................................................117

About this tutorial

It shows you how to set up a product using either the Conventional or

How this tutorial is organised

The tutorial is divided into the following lessons:

1. Setting up a simple product

2. Setting up test model point files and tables

3. Setting up, running and reporting on a product

4. Reporting on dependencies in Diagram view

5. Maintaining an actuarial library and updating the product

Conventional product input files and results

Setting up a simple product

Topics covered in this lesson

• Starting the tutorial 6

• Product Design view 8

• Creating the product 11

• Selecting the indicators 13

• Specifying the input variables 17

Details of the product

Benefits The product is a non-profit endowment, so there is a guaranteed sum assured

Premiums Premiums may be paid annually, half yearly, quarterly or monthly.

Policy Term in Years Initial Commission %

For the International product profits are taxed at 33%.

Years in Force Lapse Rate (%)

Starting the tutorial

Click OK and you will see the following dialog:

Select Create a New Workspace Using Standard Libraries to create a new

Product Design view

Now look at the next row of buttons:

• Product: A product is a set of variables specifying the calculations you need

• Run Log: Displays a log of what happened during the run.

• Results: Enables you to display and print your results.

• Error Log: Provides details of any errors in the run.

• Structure: A structure specifies a combination of products, accumulations

• Run Setting: A run setting specifies a number of parameters to control a run.

• Delete: allows you to delete an existing product.

• Help: provides context sensitive help for Product Design view.

Creating the product

Use in memory dynamic/stochastic calculations allows you to perform dynamic

When you have completed the dialog box click OK.

Selecting the indicators

An indicator is associated with a particular feature you want your product to

Note the following:

Default So take a look at the indicators selected by default:

REG_PREM Used if premiums are to be paid regularly (that is the product is

Click OK to accept the list of indicators.

Specifying the input variables

Your chosen combination of indicators will bring in the formula definition

Naming convention of variables

End characters Description