Develop Actuarial Models in Prophet (Intermediate)
“Develop Actuarial Models in Prophet” is the intermediate course in our “Prophet for Actuarial” series. This course is specifically designed for those looking to deepen their expertise in crafting and overseeing actuarial models. Aimed at professionals who are stepping into roles such as Prophet Manager or Product Pricing Specialist, this course will take you through the technical intricacies of the Prophet software.
Structured as a series of progressive modules, we begin by familiarizing you with the fundamental principles of actuarial modeling. You’ll learn how to set up a Prophet workspace from the ground up, creating libraries, products, and variables without relying on pre-existing standard libraries. You’ll also dive into the mechanics of processing new business, with a focus on understanding techniques like cross multiplication and the project method.
As you engage with the content of this course, you’ll tackle problems modeled after those faced by actuaries in the real world. The curriculum is designed to be as practical as it is informative, ensuring that the strategies and techniques you learn can be immediately applied to your professional responsibilities. This problem-solving-driven approach not only enhances your learning experience but also ensures that you leave the course with a toolkit of valuable, directly applicable actuarial skills.
Course Level: Intermediate
Target Audience: Actuarial valuation team, pricing team & modelling team
Course Outlines
Chapter 1: Actuarial Modelling in General
This Chapter covers a walkthrough on the key concepts of actuarial modelling, which serves as fundamentals to actuarial models in Prophet. Furthermore, Course Participants learn to create new library and product in a new Prophet workspace from scratch, as well as examine the critical components of the Prophet workspace.
Chapter 2: Setup Indicators, Variables and Model Point Files
This Chapter explains concepts and techniques used to setup indicators and variables. Although indicators do not carry any formulas used to perform calculations, they are crucial in calling required variables into calculations, as well as the correct formulas from variables with multiple variable definitions.
While setting variable definitions, Course Participants are introduced to common types of variable definitions, i.e. formula, constant, Model Point, global and parameter.
In addition, Course Participants learn techniques to prepare Model Point files and examine how certificate information flow from data files to calculations. To better manage Prophet results, they are also introduced to the concept of sub-product codes (“SPCODE”).
Chapter 3: Setup MOP Variables
This Chapter explains techniques used to setup cumulative variables for movement of policies (“MOP”), which is considered as the foundation of the entire actuarial model – as all cash flow projections depend on MOP, from setting a certificate in force (new business) to terminations due to death, TPD, CI, lapse or maturity. A good understanding in MOP calculations is important to ensure proper setup of cash flows projections.
To calculate no. of certificates decremented due to death, TPD and CI, Course Participants learn to setup a mortality table from scratch. Furthermore, they will be introduced to various techniques used to handle various types of mortality tables, such as with and without select years.
Course Participants also learn to view results using diagram view, which allow them to have a better understanding of the calculations. They can also transfer the results directly from diagram view to spreadsheets, to allow them to perform further validation.
Chapter 4: Define Product Features
This Chapters covers the techniques used to define product features, such as annualize premium, current sum assured and benefit amounts for death, TPD and CI. This involves exploring concepts of input variables, as well as techniques used to manage Same As products that reuse the formulas setup in the linked Master products.
By referring to the product features modified from life insurance products in real life, Course Participants learn to setup variable definitions for variables that are used to calculate contribution, sum covered and benefit amount. Using different combinations of indicator expressions, they learn to apply different formulas for the same variable. For example, we may use the same variable (e.g., CURR_SA_PP) to whole life products and credit products, but different formulas.
Chapter 5: Setup Cash Flow & APV Variables
This Chapters explores the concepts of per policy variables (“PP variable”) and portfolio variables (“IF variables”). Usually, IF variables are assigned as cumulative variables, that allow results to be summed up by SPCODEs.
By setting up various cash flow variables and corresponding actuarial present value (“APV”) variables, such as unallocated premium, commission, expense and benefit outgo, Course Participants learn the techniques used to setup and manage global table, parameter table, generic tables, as well as how the values are retrieved by a variable.
Another important technique covered under this chapter is the use of array variables, which is common in managing variables relating to account balances under investment-linked products.
Chapter 6: New Business Processing
By using the Prophet model setup from previous chapters, Course Participant learn how to project cash flows for a target new business volume, by using specific new business profile.
This Chapter covers two key new business processing methods, i.e. cross multiplication method and project method. Cross multiplication method is the most popular method used by Prophet users, whereas Project method is the method appropriate for products with calendar date specific cash flows (such as profit and surplus declaration that is applicable to family takaful products). Project method is widely used by family takaful users.