us tutorial prophet

Introduction to Prophet Tutorial

U.S. Library (2012)

This tutorial is based on Prophet version 8.0.

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CONTENTS Introduction ............................................................................................................. 1

About this tutorial ......................................................................................................................................1

Setting up a simple product................................................................................... 3 Product details ..........................................................................................................................................4 Starting the tutorial ....................................................................................................................................6 Main View .................................................................................................................................................7 Creating the product .................................................................................................................................9 Selecting the indicators...........................................................................................................................10 Specifying the input variables .................................................................................................................12

Setting up a structure, a run setting, and tables ................................................ 29 Introduction .............................................................................................................................................30 Setting up a structure..............................................................................................................................31 Setting up a run setting ...........................................................................................................................33 Setting up the model point file.................................................................................................................37 Setting up a parameter file ......................................................................................................................41 Setting up a global file.............................................................................................................................44

Running a product and reporting results............................................................ 47 Running the product................................................................................................................................48 Identifying why a run has failed...............................................................................................................51 Viewing results produced in a run ...........................................................................................................60

Reporting on dependencies in Diagram view..................................................... 63 Introduction .............................................................................................................................................64 The Product Diagram view window.........................................................................................................65 Using Diagram view to identify how to change the product.....................................................................67

Updating libraries and products .......................................................................... 69 Adding a new variable to the library ........................................................................................................70 Updating the product...............................................................................................................................74 Choosing a scenario that shows the effects of product changes ............................................................80 Identifying an error in the run ..................................................................................................................82

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Further topics........................................................................................................ 83 Regeneration of products........................................................................................................................84 Re-scanning of products (Auto-Scan) .....................................................................................................85 Conclusion ..............................................................................................................................................86

U.S. Library product input files & results............................................................ 87 Product listing .........................................................................................................................................88 Model point file......................................................................................................................................119 Parameter file........................................................................................................................................121 Global file ..............................................................................................................................................122 Results ..................................................................................................................................................124

Index..................................................................................................................... 135

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.

The tutorial will show you how to set up a product using the U.S. Library. The U.S. Library is focused on product features common in the U.S. and enables projection of traditional insurance products.

Pre-requisites Although you can start this tutorial right away, we recommend that you first spend some time reading Parts I and II of the Prophet Users Guide.

How this tutorial is organized The tutorial is set out in a number of lessons, each of which can be regarded as separate. Although you can take a break at the end of any lesson, the lessons need to be covered in the specified order as each lesson builds on results from previous lessons.

The tutorial is divided into the following lessons:

1. Setting up a simple product. This lesson instructs you how to set up a simple Prophet product. Products are the central components of Prophet. They contain the formulas and inputs used to model each policy.

2. Setting up a structure, a run setting, and tables. This lesson introduces you to the Prophet Table Editor. You will set up the structure and run setting to prepare Prophet to run the product specified in Lesson 1. You will also set up tables the product will need.

3. Running a product and reporting results. This lesson instructs you how to run the product using data and tables set up in Lesson 2. Then you will view the results from within Prophet.

4. Reporting on dependencies in Diagram view. This lesson shows you how to use Diagram view to inspect the formulas used in your product and the dependencies between them. This facility is useful for understanding how the formulas interrelate and for debugging purposes.

5. Updating libraries and products. This lesson introduces you to the processes involved in updating the underlying library. You will learn how to add a new variable to the library and update your product to use it. You will also be introduced to a few more of Prophets features.

2 Introduction Introduction to Prophet Tutorial, U.S. Library (2012)


6. Further topics. This lesson teaches you about a number of further features of Prophet such as Regenerate and Auto-Scan. U.S. Library product input files and results. This section contains copies of the listings and printouts that you will produce as you go through the tu-torial using the U.S. 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.

Dialog and interface windows illustrated in this tutorial may not reflect their initial state. Settings of pa-rameters contained in a dialog or interface window may be described subsequent to the illustration.

3


L E S S O N 1

Setting up a simple product

In this lesson, you will open Prophet and use it to set up a Prophet model to carry out the calculations for a universal life insurance product.

TOPICS COVERED IN THIS LESSON

Product details ..........................................................................................................................................4 Starting the tutorial ....................................................................................................................................6 Main View .................................................................................................................................................7 Creating the product .................................................................................................................................9 Selecting the indicators...........................................................................................................................10 Specifying the input variables .................................................................................................................12

4 Lesson 1: Setting up a simple product Introduction to Prophet Tutorial, U.S. Library (2012)


Product details The following is a description of the product that you are going to model in the tutorial. This product is a simple plan that has been chosen because it uses many of the main Prophet features available for setting up a product. The tutorial is primarily concerned with showing you how to use Prophetit does not address ac-tuarial issues such as the appropriateness of the calculations for any specific company or country.

Benefits The product is a flexible premium universal life product with a guaranteed benefit payable on death or ma-turity.

The surrender value is equal to the fund value less a surrender charge. The surrender charge is 7% of the account value in policy year 1 and is reduced by 1% per year until policy year 8 when it reaches 0%.

Premiums Premiums may be paid annually, semi-annually, quarterly, or monthly. The target annual premium per unit is $75 and the expected premium is $80. Premiums have been suspending at 5% per year, and the trend is expected to continue.

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). A load of $30 per year is deducted annually from the account value. COI charges based on the 80 CSO ANB table are also deducted from the account value.

Commissions Commission rates vary based on target versus excess premium. One hundred percent of target premium is paid in the first year. Five percent of excess and renewal premium is paid out each year.

Taxation Taxable income is assumed taxed at 35% and premiums are taxed at a rate of 2%. Taxable income includes a proxy DAC adjustment of 7.7% of premium, amortized over 10 years.

Reserves The CRVM method is used for reserving purposes, using 100% of the 80CSO ANB, sex-distinct ultimate table and an interest rate of 4.5%. The reserve method is semi-continuous. Tax reserves are calculated the same as statutory reserves, using the interest rate applicable for the year of issue of the policy.

The product will include risk-based capital based on a C2 factor of 0.5% of net amount at risk and a C3 fac-tor of 1% of reserves.

Mortality Experience The current mortality experience is 85% of the 75-80 ANB Select table, and this experience is expected to continue.

Introduction to Prophet Tutorial, U.S. Library (2012) Product details 5


Lapses At present, lapse rates are a level 5%, and this experience is expected to continue.

Future Investment Earnings The companys investment portfolio is assumed to earn 8%. A spread of 2% is deducted to determine cred-ited interest.

Discount Rates Future profits are discounted at rates of 10%, 12.5%, and 15% to put a value on the business.

Projection Data The product will be run using policy data as of December 31, 2006.



Starting the tutorial In order to run the tutorial, you need to have Prophet installed on your PC. The tutorial is based on software version 8.0.

To initiate Prophet, click the Windows Start button and, from the All Programs menu, select the SunGard iWorks folder; then click the Prophet Professional 8.x folder; finally selecting the Prophet Professional icon. The Prophet logo appears for a few seconds and then normally the following dialog box appears, al-though it may appear differently or not at all depending on how user permissions have been set for your in-stallation of Prophet.

Under the Workspace section on the left side of the Prophet screen select Create a New Workspace in order to create a new workspace for this tutorial.

Type the path of the desired location or click to navigate to it. It is recommended that you use C:\PROTUTOR for this tutorial. Select Install Template as well as Install Libraries Only Give the work-space a description of Prophet Tutorial.

Click and after a short delay, the Main View window will appear.

Introduction to Prophet Tutorial, U.S. Library (2012) Main View 7


Main View Main 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.

Main View appears initially as:

The buttons at the bottom left allow you to set up and maintain the files and tables used by your products:

This button accesses Products and Accumulations. Products is a set of variables specifying the calculations needed for a particular product that is sold,

such as with a pure endowment or an annuity.

Accumulations allows the summation over multiple products and accumulations.

This button accesses Structures and Run Settings. Structures specifies a combination of run numbers, products, and accumulations that you wish to run

as a single activity.

Run Settings specifies a number of parameters to control a run. It also specifies the locations for the tables used in a run and the run numbers that will be used.

This button accesses Model Point Files, Global Files, Parame-ter Files, Unit Price Files and Tables.

Model Point Files contain policy-specific information (the sex and age at entry of the policyholder, for example).

Global File holds information that is consistent for every product in a run. For example, the consumer price index inflation rate is the same for any product.



Parameter Files are used for product-specific information and contain variables that are the same for all policies of a particular product. For example, the annual renewal expense per policy is applied the same for all policyholders within each product.

Unit Prices Files contains the price of all the units to which products may be linked. Tables consists of all other types of tables that may hold information for the product, such as mortal-

ity, year-dependent mortality, and generic and year-index tables.

This button accesses the Libraries Libraries contains variables and formulas necessary to profit test, model, or value a wide range of

products.

This button accesses the Results and Runlogs. Results allows you to display and print results. Runlogs provides access to details of any errors in the run.

This button accesses the Search function. Search enables you to search the fields above for keywords.

This button enables you to filter the above fields.

At the top, under the Home ribbon, you will see the New button . Upon opening the drop down menu you will see:

You will be able to create new Tables, Variables, Products, Accumulations, Structures, Run Settings, Librar-ies and Model Point Files here.

Introduction to Prophet Tutorial, U.S. Library (2012) Creating the product 9


Creating the product

Click and select New Product from the drop down at the top of the screen under the Edit menu. The following is displayed:

The product Name must be six letters in length. The first letter in the product name refers to the library be-ing used and cannot be changed. Since we are using the U.S. Library, the first letter of the product name must be an N (the representative letter for the U.S. Library). Name this product N___UL.

For Description, enter Tutorial Product. This gives a description to help identify the product.

Library allows you to select the library used for the product. The library is automatically set when you enter the first letter of the product name, as described above.

Same As allows you to specify that a product is the same as another product. In this case, Prophet would carry out the same calculations as it would for the original product, but it would use its own model point file, its own name when accessing parameter file(s), and produce its own results. Hence, you would not need to specify the calculation rules separately. Do not select this option for the tutorial product.

Level Number allows you to specify the order of processing of products and accumulations. You should re-tain 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.

When you have completed entries in this dialog box, click .



Selecting the indicators You should now be presented with the Select Indicators dialog.

Indicators define the broad outline of a product and limit the variables brought into a product to only those required. An indicator is associated with a particular feature you want your product to have. For example, a flexible premium universal life policy requires the indicator UL_FLEX_PREM. By choosing this indicator, you will be provided with the input and core variables required to model a flexible premium universal life product.

Note the following:

You can drag the horizontal scroll bars to the right to display the indicator codes. You can also drag the divider that separates the outline pane and the middle pane of available indicators to resize the two panes.

Each indicator has a code made up of a letter followed by a two-digit number. The letter specifies the indicator category to which the indicator belongs. The number orders the indicators within each cate-gory.

The outline in the left pane displays the categorization of the indicators. If you highlight one of the cat-egories (B - Product Types, for example), only the indicators associated with the selected category will be displayed.

The list in the middle pane contains indicators not currently selected for the product. By highlighting an indicator and clicking , you can move it to the list in the right pane.

The list in the right pane contains all indicators currently selected for this product, along with their de-scription. For a new product, several indicators may be selected by default.

The bottom pane displays the actuarial documentation for a highlighted indicator or indicator category. This explains the purpose of each indicator and the features that it will include in the product.

Introduction to Prophet Tutorial, U.S. Library (2012) Selecting the indicators 11


If you click , an Indicator Selection Wizard will walk you through the indicator categories to se-lect the indicators that you require.

Default Indicators If you select All Indicators in the left pane, all indicators selected for this product are displayed in the right pane. For the tutorial product, there is one indicator selected by default:

Indicator Description

ALWAYS Used to bring in variables required in every product (the age at entry and policy term variables, for example).

Selecting an additional indicator To select an indicator, scroll down to it in the middle pane of available indicators and double-click on it. To deselect an indicator, double-click on the indicator you wish to remove in the right pane (you can also click

or to select or deselect a highlighted indicator).

A more convenient way to choose indicators is to select an indicator category in the left pane (B - Product Types, for example). This will reduce the indicators shown to the indicators within this category. Click

to display the Indicator Selection Wizard. The wizard shows that there is one step for each of the indicator categories. You can select or deselect an indicator using the appropriate checkbox. Click

to return to the Select Indicators dialog.

Select All Indicators in the left pane, if it is not already selected. Then, select UL_FLEX_PREM to bring in the flexible UL variables. Now, click the Name column in the middle pane to place the available indica-tors in ascending order by indicator name. Select these remaining indicators:

DISC_PROFITS to discount profits; RBC to provide RBC calculations; STAT_CRVM and TAX_CRVM to bring in the variables necessary to calculate Stat and Tax reserves

with the CRVM method;

VALIDATION to bring in variables that hold initial values for items like stat reserve, cash surrender value, and initial policies (these numbers can be compared to the numbers calculated by Prophet to see how well the inforce validates).

The indicator list in the right pane should now include:

ALWAYS TAX_CRVM VALIDATION DISC_PROFITS UL_FLEX_PREM RBC STAT_CRVM

Click to accept these indicators.



Specifying the input variables The Input Variables window should now be displayed:

In order to produce this list of input variables, Prophet has scanned the library and brought all of the input variables into the product. These variables currently show the default definitions that match the indicators selected. Input variables are those that need to be defined for each product. Some of these input variables will retain their default definitions. We will change the remaining variables to a new definition that will match the product details outlined at the beginning of this tutorial.

At a later stage, core variables will be added to the product to complete the specification of the calcula-tions. 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 GANN_PREM_PP (guaranteed annual premium per policy). First, click . Then double-click . When the list of variables in the library is displayed select the first variable on the list and type the letters G-A-N-N in quick succession to scroll to GANN_PREM_PP. Double-click GANN_PREM_PP

Note: If the variables are not in alphabetical order, click the Name column to reorder them.

Introduction to Prophet Tutorial, U.S. Library (2012) Specifying the input variables 13


You should see:

By double-clicking the variable GANN_PREM_PP in the Library you will open all the available definitions of GANN_PREM_PP listed as GANN_PREM_PP.1, GANN_PREM_PP.2 and GANN_PREM_PP.3.Your chosen combination of indicators will bring in the formula definition GANN_PREM_PP.2 which is defined as: GMP_ANN_PP(t). Select in order to see this formula. GANN_PREM_PP.2 formula defi-nition sets GANN_PREM_PP equal to the variable GMP_ANN_PP (guaranteed maturity premium) at time t. This is the default definition for a universal life product. Once brought into the product it may be amended if required. Close the NA US Library by clicking the X on . Then Select the

tab.

Naming convention of variables Before you begin to define variables within the product, a few of the Prophet naming conventions are ex-plained:

End characters Description

_PC Indicates that the variable takes values entered as a percentage (3% is entered as 3); for example, VAL_INT_PC

_M Indicates that the variable takes values entered as months (3 years is entered as 36); for example, INIT_PER_M

_Y Indicates that the variable takes values entered as years; for example, POL_TERM_Y



End characters Description

_PN Indicates that the variable takes values entered as a proportion; for example, Q_EXP_PN from a mortality table

_IF Indicates that the variable takes values entered for inforce business; for example, NO_POLS_IF

_PP Indicates that the variable takes values entered as per-policy amounts; for example, MAT_BEN_PP

Defining variables in the product You are now ready to define the input variables in this product. We will construct the definitions so that they reflect the product details listed earlier in this lesson.

In the top pane, some of the variables for this product are displayed. These input variables need to be ac-cepted or changed. This is where the product is defined.

Highlight a variable in the top pane to display its default definition in the bottom pane. You can drag the di-vider if this section is not fully visible. Variables can be defined in any order. However, for a new product it is sensible to define them in variable code order. You can reorder variables by clicking on any of the col-umn headings. For the tutorial product, click the Code column in the top pane to order the variables in as-cending variable code order (two clicks may be required to accomplish this). To change the definition of a variable, double-click the variable.

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 in the left pane initially just shows the description for the first letter of the category. In the following sections, you will specify the input variables within each of the categories.

General variables We will begin with the A - General section. Double-click the variable AGE_AT_ENTRY (age at entry). You will then be presented with the following:



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. The model point file will be set up in the next lesson. The model point 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.

Accept this definition of Model Point and move to the next variable in the product by clicking . As part of this process, Prophet checks the definition for any syntax or similar errors before it allows you to move on.

You should now be looking at the variable SEX (sex). This also has a default definition of Model Point and

can be accepted by clicking .

The next two variables, ENTRY_YEAR (year of entry) and ENTRY_MONTH (month of entry) each have a

Model Point definition. These variables will also be entered into the model point file. Click for both variables to accept their default definitions.

POL_TERM_Y (policy term in years) is defined as a formula. Click to accept the default definition.

Click to accept the default definitions of ADD_TERM_M and PER_TO_VAL_M.



The premiums for this policy are $80 per unit with a target of $75. Set PER_PREM_PU to a constant 80

and click to store this value. Set TARG_PREM_PU to 75 and click . The default definitions for

ANN_PREM_PP and GANN_PREM_PP are accurate for this product, so accept them by clicking .

Note: You will often get pairs of variables structured like ANN_PREM_PP and PER_PREM_PU. The vari-able PER_PREM_PU is normally read from a table or a constant that specifies the current or original pre-mium, whereas ANN_PREM_PP is given a formula definition, which can be used to specify how the pre-mium varies over time.

Change the variable PREM_SUSP_PC to 5 and click .

Click to accept the default definitions of the next specified variables after PREM_SUSP_PC.

Variable Description

PREM_SUSP_PC

PREM_SUSP

Premium suspension rate

Premium suspension rate multiplier

PREM_FACT_PC Actual premiums multiplier

PREM_PAYBL_Y Number of years premium payable

PREM_FREQ Premium frequency

DUMP_IN_PREM Total dump-in premium at issue

ANN_POL_FEE

SALES_TYPE

Annual Policy Fee

Determines the Sales Type

SALES_FACTOR A multiplier factor for future sales

The last variable above relates to new business projections. Since the tutorial product will not use it, the de-fault definition is accepted as is.

For now, this concludes the definition of variables in the A - General section.

Account Value variables Next is the C - Account Value section. The first variable is GUAR_INT_PC (guaranteed interest rate). Change the definition of this variable from a constant to a model point variable. This will allow you to de-

fine the guaranteed interest by policy. To do this, click and you will see the following dialog:



Select Model Point and click . Click to move forward to the next variable.

Click to accept the default definitions for GUAR_PER_END and G1YR_INT_PC. These are used to specify if the guaranteed interest rate (GUAR_INT_PC) is guaranteed at the start of the projection and for how long the rate is guaranteed.

Change the definition of the next variable, INT_SPRD_PC, to 2. This variable defines the interest spread

assumed in the Product details section. Click to move forward to the next variable.

Click to accept the default definitions for each of the next specified variables: CRED_INT_OPT, AV_BAND, BAND_PC, RATCHET_PC, INT_SPRD, INT_CRED_PC, INT_CREDR_PC and CURR_COI_TBL. The default definitions meet the needs of this product.

Next, CCOI_MONTHLY specifies how the annual COI rates read in from the 80 CSO tables are converted to monthly rates. We will keep the default choice, converting the annual rates to monthly with the exponen-

tial method. Click . We will assume 100% of these rates, so we will also use the default definition for

PROP_CCOI_PC. Click again.

We will also use the default definitions for GUAR_COI_TBL, CURR_COI_PN, and GUAR_COI_PN, so

click for each.

As with the current rates, GCOI_MONTHLY specifies how the annual COI rates read in from the 80 CSO

tables are converted to monthly rates. Click to keep the default choice to use the exponential formula. We will also use the default definitions for PROP_GCOI_PC, GUAR_NAR, and GUAR_NAR_VAL, so

click for each.

We want our loads deducted annually, so change the definition of LOAD_MODE to 1 rather than the default

0. Click . LOAD_UNIT can retain a value of 0. Click . The expense section of the Product de-

tails specifies a $30 load. Change LOAD_POLICY to 30, and then click .



Click to accept the default definitions for each of the next specified variables: LOAD_TPRM_PC, LOAD_EPRM_PC, LOAD_POL_FEE, LOAD_PREM, LOAD_AV_PC, and GLOAD_UNIT.

The Guaranteed load is also $30, so change GLOAD_POLICY to 30. Click .

Click to accept the default definitions for each of the next specified variables: GLD_TPRM_PC, GLD_EPRM_PC, GLOAD_PREM, GLOAD_AV_PC, GLOAD_VAL_PP, LOAD_AV_PP, GUAR_LOAD_PP, TOT_LOAD_CALC_PP, NLG_PERIOD, NLG_PERIOD_M, NLG_TYPE,

SPEC_PREM_PP, BONUS_OPTION, BON_RATE_PC, BON_PERIOD_M, BON_YEAR. Click to accept the default definition for GMP_ANN_PP.

You have now defined all variables in the C - Account Value section.

Benefits Next is E Benefits section. The first variable is DB_OPTION. We will specify the death benefit option

for each policy in the model point file, so click to accept this definition.

The variable DB_CORRIDOR is a toggle, specifying the death benefit corridor table to use. We will use the

DEFRA table for this product, so click to accept the default for this variable.

We will also keep the default definition for the final three variables, so click for DEATH_BEN_PP and

DB_CORR, and click for CURR_NAR_PP.

You have now defined all variables in the E - Benefits section.

Reserves and Cash Values Next is the F - Reserving/Cash Value section. The first variable is VALN_TIMING (valuation timing).

Change the value to 1 to choose the semi-continuous option. Click .

Click to accept the default definition for STAT_AG32_PCand DEF_PREM_ASSET_IND. We will use

Actuarial Guideline XVII for this product, so click to accept the default definition of 2 for ELRA_IND.

VAL_PREMCONT can also remain as is, so click .



Change the value of the next variable, VAL_INT_PC, to 4.5 as specified in the Product details. Click

. Accept the default definition of 12 for REPROJ_RES_FREQ.

Click to accept the default definition for RES_FLOOR to floor the statutory reserve at the cash value.

For SCHG_FUND_PC, we will enter a formula to calculate the surrender charge percentage specified in the

Product details. Click , select Formula, if it is not already selected, and then click . The surrender charge needs to decrease from 7% to 0% over the first 8 years and then remain at 0%. Enter the following formula to duplicate this pattern:

MAX(8 - POLICY_YEAR, 0)

Click to accept the change.

Accept the default for each of the following variables by clicking for each:


SCHG_UNIT Surrender Charge per Unit

SCHG_POL_FEE Indicates whether surrender charges apply to policy fee

SCHG_TPRM_PC Surrender charge as a percent of target premium

SCHG_EPRM_PC Surrender charge as a percent of excess premium

SCHG_PREM_PP Total surrender charge based on premium

SURR_CHG_PP Total surrender charge per policy

Change TX_TIMING to 1; keep TAX_AG32_PC and TX_PREMCONT at 0, clicking to accept each.

Click to accept the default definitions for TX_ELRA_IND. Set TX_INT_PC to 4.82 and click .

Click to accept the default definition of 1 for TX_RES_FLOOR to floor the tax reserve at the cash val-ue.

You have now defined all variables in the F - Reserving/Cash Value section.

Interest Rates Next is the G - Interest Rates section. The first variable is GROSS_RET_PC (annual gross earned rate of

investment income). We will set this variable to a parameter definition. Click , select Parameter,

click , and then click .



The remaining variables in this section comprise the investment return as well as the rates used to discount

the business. Accept the default definition for the following two variables by clicking for each.


GROS_RET_PC This is the gross return actually used in the projection; for a liability only run it will equal GROSS_RET_PC

NET_RET_PC This is the net return after investment expenses

Change DISC_A_PC (the first discount rate used to discount profits) to 12.5, and then click .

Change DISC_B_PC (the second discount rate used to discount profits) to a formula definition. Click

, select Formula, if it is not already selected, and then click . Then enter DISC_A_PC -

2.5; click .

Change the formula definition of DISC_C_PC (the third discount rate used to discount profits) to

DISC_A_PC + 2.5, and then click .

Taxes

Next is the H - Tax section. The first variable is TAX_TIMING. Click to keep the default definition.

Change the definition of PREM_TAX_PC to 2, and click to accept the change.

Click to accept the default definition of DIFF_EARN_PC.

Change OTAX_PROF_PC to be read from a global table. Click , select Global, click ,

and then click .

Click to accept the default definitions of the next three variables.


TAX_DL803_PC Dividend Liability Section 803 Adjustment

DAC_TAX_PC Percent of premium capitalized for Proxy DAC

DAC_AMORT_YR Number of years over which Proxy DAC is amortized



Commissions Next is the I - Commission section. Using the same process previously described, retain the default defini-tion of the first six variables.


COMM_AV_PC Commission as a percent of AV

COMM_AV_TIME Timing of the percent of AV commissions; default is Annual

COMM_COMM_PC Commission as a percent of commission

COMM_PER_POL Commission per Policy

COMM_UNIT Commission per Unit

COMM_POLFEE Sets whether policy fee is commissionable; default is no commission on policy fee

Change COMM_TARP_PC (commission rate as a percent of target premium) to a formula definition. Click

, select Formula, if it is not already selected, and then click . We want the commission to be 100% of target premium in the first year and 5% of target premium in all renewal years. Enter the fol-lowing in the formula section:

IF t = 1 THEN 100 ELSE IF mult(t+11,12) THEN 5 ELSE COMM_TARP_PC(t-1)

Click to accept the new formula.

The commission on excess premium is 5%. Change the variable COMM_EXCP_PC (commission as a per-

cent of excess premium) to a constant 5, and then click .

Accept the default definitions of the last specified variables.


IC_FUND_PP Initial commission as a percent of AV

IC_PAYBL_PP Initial commission per policy

IC_EARNL_PP Initial commission earned on lapse

IC_EARND_PP

IC_RECOV_IND

Initial commission earned on death

Controls commission clawback application.

IC_RECOV_PC Initial commission recovered on chargeback

RC_START_M Month in which renewal commission starts

RC_FUND_PP Renewal commission on fund per policy




RC_PAYBL_PP Renewal commission per policy

Expenses Next is the J - Expenses section. ACQ_FIXED is the first variable and determines the fixed acquisition ex-pense per policy. According to the Product details, the first-year expense is $160, with a renewal expense of $24, leaving $136 as the acquisition expense. Therefore, set ACQ_FIXED to a constant 136 and click

.

Since the only acquisition expense for this product is the fixed, per-policy expense just defined, accept the

default definitions of the next specified variables by clicking : ACQ_PER_UNIT, ACQ_COMM_PC, ACQ_DUMP_PC, ACQ_PREM_PC, ACQ_TARP_PC, and ACQ_EXP_PP.

Change the definition of MNT_PP_POL (renewal per policy expense during the premium payment period)

to 24 and then click .

Keep the default definitions for the next five variables by clicking for each.


MNT_AV_PC Maintenance Expense as a percent of AV

MNT_AV_MODE Mode of the percent of AV Maintenance; default is Annual

MNT_PP_UNIT Maintenance Expense per Unit during Premium Payment Period

MNT_PREM_PC Maintenance Expense as a percent of Premium

MNT_PP_MODE Mode of Maintenance Expenses during Premium Payment Period; default is Modal

Change the definition of MNT_INFL_PC (annual rate of inflation for maintenance expenses) to 4 and click

.

Click to accept the default definition of MNT_INF_PC. This variable is used to read in actual inflation

in an ALM run. Also accept the default definition of EXP_GLOB_PC by clicking .

These are the only expenses we are modeling, so accept the default definition for the remaining variables in

this section by clicking .


MNT_COMM_PC Maintenance Expense as a percent of Commission

MNT_RESRV_PC Maintenance Expense as a percent of Reserve




MNT_PU_UNIT Maintenance Expense per Unit for Paid-Up Policy

MNT_PU_POL Maintenance Expense per Policy for Paid-Up Policy

MNT_PU_MODE Mode for Maintenance Expenses during Paid-Up Period

INV_EXP_PC Investment Expense

MNT_EXP_PP Total Maintenance Expense per Policy

DEATH_EXP_PP Expense per Death

SURR_EXP_PP Expense per Surrender

LAPSE_EXP_PP

PW_EXP

Expense per Lapse

Partial WD Expense before inflation

MAT_EXP_PP Expense per Maturity

DTH_EXP_PP Calculated Expenses associated with Deaths per Policy

SUR_EXP_PP Calculated Expenses associated with Surrenders per Policy

LPSE_EXP_PP

PW_EXP_PP

Calculated Expenses associated with Lapses per Policy

Partial WD Expense after inflation

MATUR_EXP_PP Calculated Expenses associated with Maturities per Policy

Mortality The first variable in the K Mortality section is Q_EXP_PN (mortality used for the experience basis).

Click to accept the default definition.

The formula definition of Q_EXP_PN depends upon the Q_EXP_TBL Secondary Input variable, which is

new to the original mortality variable list. Click to accept the default definition of Q_EXP_TBL.

Default definitions for MRT_GLOB_PC and MRT_SMOKE_PC can also be accepted.

Amend PROP_EXPQ_PC, the percentage of the experience mortality rates, to be a parameter definition.

Click , select Parameter, click , and then click . The parameter value will be set in the next lesson.

Accept the default definition of MRT_UW_PC and the default, exponential formula for Q_VAL_MTHLY, which defines how annual mortality rates are converted to monthly mortality rates.

Accept the default definition of Q_VAL_PN. The formula definition of Q_VAL_PN depends upon the

Q_VAL_TBL Secondary Input variable. Click to accept the default definition of Q_VAL_TBL.

Change the percentage of the valuation mortality table used, PROP_VALQ_PC, to a parameter definition type.

The variable Q_TAX_MTHLY is the tax equivalent of Q_VAL_MTHLY. The default definition is fine.



Accept the default definition of Q_TAX_PN. The formula definition of Q_TAX_PN depends upon the

Q_TAX_TBL Secondary Input variable. Click to accept the default definition of Q_TAX_TBL.

The default definition for PROP_TAXQ_PC can also be accepted.

The variables CLASS_CODE, SEX_CODE, and SMOKER_STAT define the class, gender, and smoker sta-

tus of the model point being valued. Accept their default definitions by clicking .

You have now defined all variables in the K - Mortality section.

Decrements This section begins with the ANN_LAPSE_PC variable, which defines the percentage of policies that lapse or surrender each year. The default formula is a constant lapse rate. Change the constant to 5 to calculate a 5% lapse each year.

Accept the default definitions of the following specified variables:


LAPS_MULT_PC Multiple applied to entered lapse rates

SKEW_FACTOR Lapse and paid-up policy skewness factor

LAPSE_TIMING Lapse timing; default is End of Month

LAPS_100_MTH Tells Prophet what to do with a lapse rate of 100%; default is to convert to monthly, lapsing policies through the year

LPS_GLOB_PC Percentage of lapse rates used

ANN_MAT_PC

PW_TIMING

PW_PC

PW_FIRST_MTH

PW_USE_PC

ANN_PW_PC

PW_MTHLY_PC

Annual maturity rate

Partial Withdrawal Timing

Percent of max FPW taken as Partial

First month PW is allowed

The portion of Policyholders making PW

Annual partial withdrawal percentage

Partial withdrawal percentage taken monthly

EL_MULTIPLE Multiple used for excess lapses; only needed in ALM run

EL_EXPONENT Exponent used for excess lapses; only needed in ALM run

EL_THRESHOLD Threshold used for excess lapses; only needed in ALM run

EL_DIFF Calculated difference between competitor rate used in excess lapse calculation; only needed in ALM run

EX_LPSE_PC Excess Lapse Rate; only needed in ALM run

EX_PW_PC Excess Partial Withdrawal Rate; only needed in ALM run

LPSE_CAP_PC Total Lapse Cap Rate

LPSE_FLR_PC Total Lapse Floor Rate



Initial values This section defines many variables, most of which are used to turn on or off different ALM settings. Some of these variables are also used to define initial values used for validation. All variables in the N - Initial Values section will keep their default definition. The following table outlines these variables.


AVG_SIZE_TYP Specifies what the AVG_SIZE variable in the model point file is referring to; for UL the only choice is Avg Face Issued

DURATIONIF_M This is the duration inforce at the start of the projection

TOTAL_ACCVAL Account Value at value, used for inforce business; defined in the model point file

TOT_VOLUME Total volume at valuation date; defined in the model point file

AVG_SIZE Average policy size; defined in the model point file

INIT_AV_PP Total account value per policy

ALM Indicates whether the run is an ALM run

CS_INDEX_PC Index used to calculate crediting rate

INFL_RATE_PC

LT_IL_RT_PC

Inflation rate used in ALM run

Long Term Inflation Rate

INFL_INDEX Index used to calculate inflation

INFL_IDX_ST

INIT_IL_IDX

Inflation used at the start of the projection

Initial Inflation Index

CX_INDEX_PC Competitor Index Rate

PORT_ARET_PC

CS_LINKAGES

IL_LINKAGES

CX_LINKAGES

PY_LINKAGES

LOB

LINKAGES

Annual return on assets in ALM run

Crediting Index Linkages

Inflation Rate Linkages

Competitor Index Linkages

Portfolio Yield Linkages

Line of Business (Portfolio Name)

Switch Linkages

INIT_UNITS Initial Units used for validation

INIT_PREMIUM Initial premium used for validation

INIT_STATRES Initial stat reserve used for validation

INIT_CASHVAL Initial cash value used for validation

INIT_POLS Initial policies used for validation

INIT_LOANBAL Initial policy loan balance used for validation

Miscellaneous As its name implies, this section pertains to input variables that do not logically fit into other defined sec-tions. We are only going to change the definition of two variables: RBC2_NAR_PC and RBC3_RES_PC, as specified below. All the other variables in this section can keep their default definitions.




RBC2_NAR_PC This is the percent of net amount at risk held as the C2 component of risk-based cap-ital; change the constant to .5

RBC3_RES_PC This is the percent of statutory reserves held as the C3 component of risk-based capital; Change the constant to 1

Saving the product

Click to save all 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 because the default definitions will then be used for all these variables. Instead, click to return to the list of input variables. First se-lect Input Variables in the left pane. You can then locate the variables that still have a Not Defined status by clicking on the Status column header so that they all appear at the beginning or end of the list of input variables.

When you have accepted all the variables, click .

Click to save the product.

You will now be in the Main View. Select and expand the Products folder to reveal your product. Select your product, N___UL.

Printing the product Make sure your Product is open by double clicking the icon, then select the Print option on the drop-down

menu by selecting . The Print Selected Variables dialog is displayed:



This dialog can be used to print virtually any aspect of the product. At this stage, select the Variable Details options, and then click . Be aware that a rather large number of pages may be printed. Compare your output with the appropriate section provided at the end of this tutorial.



This page intentionally contains no relevant information.

29


L E S S O N 2

Setting up a structure, a run setting, and tables

In this lesson, you will set up a structure, a run setting, and the tables for the product you specified in the previous lesson.


Introduction .............................................................................................................................................30 Setting up a structure..............................................................................................................................31 Setting up a run setting ...........................................................................................................................33 Setting up the model point file.................................................................................................................37 Setting up a parameter file ......................................................................................................................41 Setting up a global file.............................................................................................................................44

30 Lesson 2: Setting up a structure, a run setting, and tables Introduction to Prophet Tutorial, U.S. Library (2012)


Introduction Model point files contain the policy data that is used as a starting point for Prophets calculations. Each model point represents an individual policy or a group of policies. In the latter case, each model point con-tains 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 is lapse rates where different product types 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 is the risk discount rate, which you would want to keep the same for the whole company.

More information can be found in Part 2: Setting up Tables: Creating a Table

Introduction to Prophet Tutorial, U.S. Library (2012) Setting up a structure 31


Setting up a structure The set up of a run involves specifying a structure and a run setting. Structures contain information about what you want to run; run settings contain information about how you want to perform the run. You can set up and maintain a number of different structures and run settings so that you can switch between them rather than amending them. Lets first set up the structure.

Open the drop down menu by clicking at the top of the screen and select New Structure. You will then be presented with the following:

Enter Tutorial Structure in the Name parameter at the top of the dialog.

Click on the Products / Accumulations tab.



The Select Products window allows you to specify the products to be included in the structure. On the left, a list of all the products that can be selected is displayed. The list on the right shows the products you have selected for this structure. Highlight the N___UL Tutorial Product entry and double-click or use to se-lect it; then click .

Next, click . The Select Accumulations window allows results from one or more products to be aggregated together. This aspect is covered in the Prophet Model Office Tutorial and can be ignored at this stage. Click .

The Configuration tab allows you to set the variables to be calculated and the new business method to be used. For this example, the defaults are acceptableProphet will calculate all variables, and there is no new business. The cross multiplication method is fine.

Click to save the structure.

Introduction to Prophet Tutorial, U.S. Library (2012) Setting up a run setting 33


Setting up a run setting Before you set up any tables, you must create a run setting.

Click at the top of the screen and select New Run Setting from the drop drown menu to display:

Select the Calculation Run option, if it is not already selected, and then click to display:

Enter Tutorial Run Setting in the Name parameter at the top of the dialog. Then complete each of the items in the tabs as described in the following sections.

Run Parameters tab This tab allows you to specify the Start Date and duration of 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 begin as of December 31, 2006, so change the start date to December 31, 2006.



The Future Accumulation Period is the number of years of projected results included in the results files pro-duced by Prophet. The actual calculations are always effective 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 calcu-lated. You are projecting inforce policies with 70 years until maturity and wish to be able to view the results of all the calculations, so enter 70. If you were also projecting new business policies, you would enter 71 ra-ther than 70 because, for a 70-year policy, the maturity proceeds are paid out in the first month of policy year 71. Thus, if the policy was issued in June 2005, the proceeds are paid out in June 2075.

The Past Accumulation Period is the number of years of results prior to the Start Date included in the results files produced by Prophet. It primarily enables you to produce output for checking historic asset share cal-culations. Leave the default value of 0 unchanged.

Month in which Company Year Ends is used to ensure that reporting by company year is handled correctly within Prophet. Accept the default of 12.

We will only perform one run, so leave the Run Numbers parameter at 1. The other parameters on this tab are not needed in the run, so you can leave them as they are. They are covered in the Model Office Tutorial.

Tables tab

This tab allows you to specify:

The location in which the model point files for the run setting are held and their file extension. The locations and names of the global, parameter, and unit 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 path including the drive letter, any location you enter is taken relative to the workspace location. Clicking will make sure the file directories specified exist.

Introduction to Prophet Tutorial, U.S. Library (2012) Setting up a run setting 35


The default Model Point Files Location is MPFILES, which means that if you have installed the tutorial on the C: drive and in the location PROTUTOR, the model point files will be read from C:\PROTUTOR\MPFILES. The default location for all other files is the TABLES location and is handled similarly.

The tutorial will use the default locations and names. However, since you will not be using a Unit Prices File or a Sales File, ensure these entries are blank as indicated above.

CMO Setup tab Accept the defaults in this tab.

Results tab This tab enables you to specify what kind of output is to be generated and the format(s) in which it is to be produced. It appears as:

Results Files These options allow you to choose the type of results files that will be produced in Prophets own results file format:

Item Description

Projection / NB Profile Results files under this option contain projected results for each month of the future and past accumulation periods.

Valuation Results files under this option contain the values calculated at the start of the projec-tion period split by maturity year or current age.

Select Projection / NB Profile, if it is not already selected.



Variables in Results Files This section allows you to choose the variables to be retained in the results. Variables that 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, 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 containing values for the variables in a selected variable group are gener-ated.

Cumulative Results are generated that contain values for all the variables that have had their cu-mulative property checked. This will normally be all variables for which it makes sense to sum values across model points. If a variables cumulative property is checked, its values will also be aggregated across products if accumulations are be-ing used.

All Results are 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 calcula-tions that you require.

So that you can inspect the values of all the variables in your product, select All, if it is not already selected.

Text Results Files These options are the same as those under Results Files, except that the results are in a text format instead of in Prophets own results format. These results can be used in other applications. Do not select either of the Projection / NB Profile or Valuation options.

The Individual Model Point Results Files option allows you to specify whether output files that contain a line of results for each model point are to be generated. If selected, individual model point results will be produced in Prophets 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 that have their Individual MP Output property checked (Part 3: Results: Displaying Results of the PP Users Guide for information about the properties of variables). For the tutorial, do not choose this option.

Error Control Options in this section allow you to specify the maximum number of errors allowed before Prophet termi-nates the calculations for a particular product and the maximum number of warnings before termination of an accumulation. The default for each is zero, which means that the calculations for a product will terminate when the first error occurs. If you enter 10, a product will only terminate when the 11th error occurs. If you select the No Limit options, Prophet will continue calculations irrespective of the number of errors that oc-cur.

The model point file you are using for this product contains only one model point so you will only want re-sults if no errors occur. Accept the default entries of zero for both fields.

Runtime Configuration tab This is a small run so the defaults for the Runtime Configurations tab can be accepted as is.

Saving the run setting Click to save the run setting.

Introduction to Prophet Tutorial, U.S. Library (2012) Setting up the model point file 37


Setting up the model point file The product needs policy information before it can run. You will need to set up the model point file, so

click and select New Model Point from the drop down menu. You will see the following:

Change the file name to N___UL as shown in the picture above. Then click on Initialise. You should see:

Select the N___UL Tutorial Product and click .

You are now in the Table Editor with an empty model point file displayed. All the variables you defined to read from the model point in your product are listed across the top.



Properties

Now click to display the following dialog:

The table is located in the mpfiles directory and you can see that it contains nineteen

Enter Tutorial Model Point File in the Description parameter, and then Click .

Sub-product codes The first column in the table is headed SPCODE. This is the sub-product code and is used by Prophet when it accumulates results. Prophet will automatically sum results for all of the model points with the same SPCODE. This could be used to make a distinction between the different ways your business is obtained (through direct writing and brokers, for example). For model office work, you will normally set SPCODE to a number between 1 and 50 for inforce business and between 51 and 9999 for new business. The model points must be entered in the model point file in ascending order of SPCODE.

You are just going to run one model point through the product in this part of the tutorial. Since it will be an inforce policy, enter 1 as the SPCODE for your model point.

Introduction to Prophet Tutorial, U.S. Library (2012) Setting up the model point file 39


Values You are now able to enter values for the model point variables in your product. Note that when the cursor is in a column headed by a variable name, the description of that variable is displayed in the bottom right pane.


AGE_AT_ENTRY The policyholders age at the start of the policy; set the age to 30

SEX Enter 0 or choose Male from the drop-down list

ENTRY_YEAR Enter 2005 for the calendar issue year

ENTRY_MONTH Enter 7 or select July from the drop-down list to indicate the issue month

PREM_FREQ This is the mode of premium payments per year; enter 1 or select Annual from the drop-down list

DUMP_IN_PREM For an inforce policy, this is only used to validate an account value and calculate to-tal premium paid; enter 100000

GUAR_INT_PC This is the annual guaranteed interest rate; enter 4

DB_OPTION The death benefit option for this policy is level; enter 1 or select Level DB from the drop-down list

SMOKER_STAT The smoker status; enter 0 or select Non Smoker from the drop-down list

CLASS_CODE This allows you to enter a risk class if any assumptions vary by risk class; since we are not assuming a class, enter 0

TOTAL_ACCVAL Enter 200000 as the total account value at valuation

TOT_VOLUME This is the specified amount of the policy; enter 1000000

AVG_SIZE The average face amount per policy grouped in this model point; we are only model-ing one policy, so this equals the total volume, 1000000

INIT_UNITS The total number of units at valuation is only used for validation; enter 1000

INIT_PREMIUM The total annual premium at valuation; enter 0

INIT_STATRES This is the total statutory reserve at valuation and is only used for validation; enter 1000

INIT_CASHVAL The total cash surrender value at valuation is only used for validation; enter 1000

INIT_POLS This is the total number of policies at valuation and is only used for validation; enter 1

INIT_LOANBAL This is the total loan balance at valuation and is only used for validation; enter 0

Saving the file

Click . Click to accept the file name and location.

Printing the file

Select the Print option on the drop-down menu to print the file by clicking on .



Compare your output with the appropriate section provided at the end of this tutorial. Then close the Model Point Tab.

Introduction to Prophet Tutorial, U.S. Library (2012) Setting up a parameter file 41


Setting up a parameter file Parameter files are two-dimensional tables that contain constant values indexed by product name and vari-able name.

The example used in this tutorial does not really emphasize the advantages of using parameter files because you currently have only one product. In practice, you would normally have more than one product, so pa-rameter files would be used for variables whose values change across products.

Creating the parameter file

To create a new parameter file you click and from the drop down menu you select New Table.

Select Parameter, and then click .

You will 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 .

Values You will be presented with an empty parameter file with all the variables you defined as parameters in your product across the top.



Enter the values for these variables as follows.


GROSS_RET_PC This is the gross return earned on assets; enter 8 PROP_EXPQ_PC This is the percentage of the experience mortality table that you wish to use; enter

85

PROP_VALQ_PC This is the percentage of the valuation mortality table that you wish to use; enter 100

Properties

Click and enter the description Tutorial Parameter File. Then click .

Saving the file

Click to display the following:

Change the File Name to PARAMET.FAC and click to accept the file name and location.

Introduction to Prophet Tutorial, U.S. Library (2012) Setting up a parameter file 43


Printing the file

Select the Print option on the drop-down menu to print the file by selecting .

Compare your output with the appropriate section provided at the end of this tutorial. Close the Table Tab.



Setting up a global file Global files are two-dimensional tables that contain constant values indexed by variable name and run num-ber.

Properties

Click to set up a new global file by selecting New Table from the drop down menu.

Select Global and click

Select your product and click .

Click on to open the following dialogue box:

Enter a description such as Tutorial Global File; enter 1 in the Run Numbers box, and click .

Introduction to Prophet Tutorial, U.S. Library (2012) Setting up a global file 45


You will see:

Click .

Table worksheet You will be presented with the following:

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 Enter the following values for the variables:


ALM This is only used in an ALM run; enter 0 or choose No from the drop-down list




EXP_GLOB_PC Enter 100 since we are not performing sensitivity testing

LINKAGES This is only used in an ALM run; enter 0 or choose No from the drop-down list

LPS_GLOB_PC Enter 100 since we are not performing sensitivity testing

MRT_GLOB_PC Enter 100 since we are not performing sensitivity testing

OTAX_PROF_PC This is the annual tax rate on taxable income; enter 35

RBC_PC Enter 100

TAX_TIMING This is the frequency at which taxes are due; enter 1 or choose Annual from the drop-down list

Saving the file

Click . Rename the file Global.fac. Click to accept the file name and location.

Printing the file

Select the Print option on the File drop-down menu to print the file by selecting .

Compare your output with the appropriate section provided at the end of this tutorial. Close the Global Table Tab.

Making changes Further columns and rows can be added to your tables, as required. It is also possible to use the Table Editor Formulas to add or copy data, rather than entering individual values.

47


L E S S O N 3

Running a product and reporting re-sults

In the previous two lessons, you created a product, the structure, and the run setting and its related model point, parameter, and global files. Now you are ready to:

Run the product. View the results of the run.


Running the product................................................................................................................................48 Identifying why a run has failed...............................................................................................................51 Viewing results produced in a run ...........................................................................................................60

48 Lesson 3: Running a product and reporting results Introduction to Prophet Tutorial, U.S. Library (2012)


Running the product Before running the product, lets specify descriptions for a run number and two sub-products. With descrip-tions assigned, these items have a little more meaning. Select Options on the Prophet Application Menu drop-down menu.

Then select Descriptions:

Introduction to Prophet Tutorial, U.S. Library (2012) Running the product 49


In the Run Numbers tab, leave Liabilities in the Description parameter under Run Number 1 and Delete Corporate.

In the Sub-Products tab, enter 0 for the first Sub-Product and Total Business for the sub-product Descrip-tion. Click to add another sub-product entry. Then, enter 1 for the second Sub-Product and Existing Business for the sub-product Description. Delete New Business if it is there by selecting the row and click-ing .

Click . Then click on the Options dialogue. Go to the Home Ribbon.

Close your N___UL tab if you have it open. Select the product you wish to run. Now, click and you will see the following dialogue.

Click .



Prophet first carries out various checks such as ensuring that all the model point files exist for the products in-cluded in the run and that the global and parameter files specified in the structure exist. If not, a warning is pro-duced.

While the run is in progress, the Run Information dialog is displayed.

As the run proceeds, Prophet does the following during a successful run:

1. It recognizes that you are running a new product and carries out the variable sequencing, code genera-tion, and compiling processes needed to generate an executable program.

2. It carries out the calculations for the model points and creates a file of the sub-product results for the re-quired variables over the specified period of accumulation.

3. It writes to a run log file, the run messages that appear on the screen, which show how the run is pro-gressing.

Prophet fails to complete the first run attempt, however, and displays an error message.

Introduction to Prophet Tutorial, U.S. Library (2012) Identifying why a run has failed 51


Identifying why a run has failed 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.

Click to see the error.



Click View then click on the subsequent screen and finally select to bring up the screen:

This error involves the current cost of insurance rates table. To correct this error exit the run log viewer. And then click on the Run Monitor viewer. Open your product by selecting

and then double-clicking your product from the list.

Locate and select the CURR_COI_TBL variable. In the formula definition displayed for this variable in the bottom pane, notice the COI_Table_Mappings, SEX, SMOKER_STAT, CLASS_CODE, and VAR_NAME parameters. These parameters will be used to set up the table for this variable. Scroll down to and select GUAR_COI_TBL and notice that the formula definition for this variable contains the same for-mat and parameters as those in the formula definition for CURR_COI_TBL. Both of these variables are subsequently defined in a COI mapping table.

Go to the Home ribbon and select and click on New Table.

Select Generic, if it is not already selected

Rename the table as above and click .

The following dialog should now be displayed:

Introduction to Prophet Tutorial, U.S. Library (2012) Identifying why a run has failed 53


Enter Tutorial COI Table Mappings in the Description parameter.

Index Variables is the number of indices used to differentiate the various groupings of data contained in the table. This value directly corresponds to the number of columns available in the table. The formula defini-tion indicates that the SEX, SMOKER_STAT, and CLASS_CODE variables are used to vary data in this ta-ble. These three variables plus the VAR_NAME variable equals four, so enter 4.

Data Rows is the number of unique groupings of data contained in the table. This value directly corresponds to the number of rows available in the table. Data for two sexes (male and female) will be contained in the table. For each sex, there are two smoker statuses (Non Smoker and Smoker). For each smoker status, there are six classes (codes 0 through 5). Two times two times six equals 24, so enter 24.

Data Columns is the number of columns under the VAR_NAME variable to contain actual data. We are en-tering data for CURR_COI_TBL and GUAR_COI_TBL, so enter 2.

Name of Last Index Variable must remain VAR_NAME, the name of the variable used to store the actual data as indicated in the formula definition.

Leave Table Format selected for the Layout. Click .



In the first numbered row, enter the name of the three index variables, SEX, S

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