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AXIS Transparency

AXIS is a vendor-maintained system offering the users the security of locked code. This in turn has enabled GGY to efficiently improve the design of AXIS both internally, and from the user interface point of view, for the benefit of all users. Combined with our philosophy of a single version system integrating multiple actuarial applications and incorporating user requests, the net result has been continuous growth in the flexibility and power of the system.

The philosophy of locked code, however, also prevents users from directly examining code to determine how AXIS performs its calculations. Sometimes, accordingly, AXIS is referred to as a 'black box". Our preference is to think of AXIS as a glass box, and we are constantly looking at ways to increase the ability of users to see what is going on inside AXIS, and become comfortable with the results of the complicated calculations AXIS is able to perform. We understand this is essential whether or not users are interested in the underlying code.

We use the term "transparency" to refer to the overall capability of users to extract intermediate calculation steps that demonstrate the result of entering specific assumptions within cells and in other assumption screens. The following features and reporting options contribute to the overall transparency of AXIS as an actuarial tool. This list is followed by descriptions of each feature or report in turn, and you may click on any specific item in the list to jump directly to the appropriate section.

1. Illustration Reports 8. Policy Year Timing Option in Calendar Year Projections
2. Regular Policy Year Reports 9. Seriatim Custom Reports
3. Special Purpose Supplementary Policy Year Reports 10. Seriatim Processing Options
4. Calculated Tables 11. Summary Report
5. Valuation Factor Calculation and Reserve Component Reports 12. Queries
6. Standard Calendar Year Projection Reports 13. Comparator
7. Custom Calendar Year Reports 14. Other Tips and Techniques

1. Illustration reports

Illustration reports are basic reports showing how key product features, such as cash values and death benefits are assumed to change over the life of the policy. Currently, illustration reports are only available in the Par, UL, Annuity (accumulation phase only) modules, and in the Asset Module (for mortgage assets only).

In the Par module, the illustration shows the projected dividends payable and how they accumulate under the dividend option selected, on a policy year basis. In other modules, the illustrations may be displayed monthly or annually, as the fund accumulations operate on a policy month to policy month basis. Fund accumulations involving multiple policyholder investment accounts can be quite complex to calculate, and there are many different approaches. AXIS illustrations are useful in these modules to reconcile the projected fund accumulation or dividend options accumulations to external sales illustrations or to administration system calculators, as well as to understand how current and projected policyholder values were assembled under a specific scenario or set of assumptions.

As with many other reports, there is a custom report option for illustrations allowing you to select which of the available columns to include in the designed report, and illustrations can be printed or saved to the import export database as part of a batch cell recalculation.

Sales illustrations can be prepared for representative issue ages and policy sizes in a product design project, or based on selected seriatim records when modeling an inforce portfolio for valuation or financial projections.

2. Regular Policy Year reports

Policy Year Reports are based on illustrations of policyholder values, combined with actuarial assumptions as to projected decrement experience, investment income, expenses and taxes. The primary purpose of Policy Year Results is to summarize cash flows and then to develop the primary profit measures, such as Book Profit and Contribution to Free Surplus, for a selected unit volume of new business. Policy Year Reports are determined on a policy year basis with terminal reserve values for Statutory or Tax reserve adjustments, depending on purpose. Only annual detail is currently available in Policy Year Results although actual component cashflows may be defined and calculated on a monthly basis within each year.

Policy Year Results, like Illustrations, can be prepared in a product design project for representative issue ages and policy sizes as of a given issue date, or can be based on selected seriatim records when modeling an inforce portfolio for valuation or financial projections. While Policy Year Result reports can be customized by selecting specific columns and/or issue ages from the total results, they can not be subdivided any further except by using the Special Purpose Policy Year Reports and Calculated Tables as described below. When more detailed information is required on a policy year basis, users should consider the special Policy Year Timing option in Calendar Year Projections described below.

3. Special Purpose Supplementary Policy Year Reports

Policy Year Results can be further supplemented by five reports which document more detailed calculation steps in specific situations:

(a) Guideline XXX and Reg 147 method reserves - These reserve methods call for up to 4 separate component calculations, with comparisons between the components, in order to determine the final reserve at each duration. This report details each of the four components and the comparison results in 33 columns. The report can be used to detail the calculations for any one of the Statutory, Second or Tax Reserve calculations provided that one of the appropriate US Statutory methods is selected, and appropriate valuation mortality assumptions are specified. There is an option to customize this report to include only selected columns.

(b) Canadian policyholder tax calculations - The special Exempt Test plus T5 report is available to provide calculation details related to the exempt test which allows accrual taxation of the accumulating value inside the policy to be avoided, and for the T5 calculation of taxable investment income, which is required as part of projecting Canadian Investment Income Tax (IIT).

(c) US policyholder tax calculations - This report is available to provide calculation details for the US policyholder tax exempt test calculation which is now available in the UL module.

(d) Reserve component and US GAAP Reserve Component - These reports display the main components of the calculated net terminal reserve per unit of nominal face amount, duration by duration, from time zero.  Components include, for example, the present values of death benefits, surrender benefits, other benefits, compensation/premium tax, expenses, IIT, reinsurance costs, and valuation premium. All values are per $1,000 nominal face.  The Reserve Component report is available for the PPM method and for various net premium valuation methods, while the US GAAP Reserve Component report is offered instead for US GAAP FAS60 and FAS97 reserve methods.  

(e) Reserve Reconciliation Report and US GAAP Reserve Reconciliation Report -These two reports are used to reconcile the calculated terminal reserve per unit between year start and year end reserves, on a policy year basis.  Available columns in the reports track the cashflows that are assumed to occur duration by duration in the calculation of the reserve factor per unit of nominal face amount, along with the required interest and reserve amounts assumed to be released on each decrement. All values are per $1,000 nominal face.  The Reserve Reconciliation Report is available for the PPM method and for various net premium valuation methods, while the US GAAP Reserve Component report is offered instead for US GAAP FAS60 and FAS97 reserve methods.

Like Policy Year Results, these special reports can be prepared for representative issue ages and policy sizes as of a given issue date in a product design project, or can be based on selected seriatim records when modeling an inforce portfolio for valuation or financial projections. In general, these reports can not be further customized within AXIS, although there is an option for the Guideline XXX/Reg 147 Report to design customized versions that display only selected columns.  All of these reports can be easily sent directly to an Excel spreadsheet or exported to the Import/export database, for further modification or formatting.

4. Calculated Tables

Another way AXIS makes calculation details available is through Calculated Tables. Originally AXIS offered a large number of optional Calculated Tables, but only allowed one of the optional list to be selected in any one run. This was improved in AXIS 9.4 by moving the contents of many of the optional tables to the new Supplementary Policy Year Reports described above, and by making all the remaining optional Calculated tables available with every policy year result calculation.

Calculated Tables display specified values by issue age and annual policy duration, and are calculated each time the Policy Year Results are run. Like Policy Year Results, these tables can be prepared for representative issue ages and policy sizes as of a given issue date in a product design project, or can be created based on selected seriatim records when modeling an inforce portfolio for valuation or financial projections. While these tables can not be further customized within AXIS, they can be sent directly to an Excel spreadsheet or exported to the Import/export database, for modification or formatting.

5. Valuation Factor Calculation reports

AXIS offers a special batch process designated as "Valuation Factor Recalculation" which generates an ASCII file of unitary reserve factors whose original purpose was for use by external factor-based valuation systems. However, these reserve factors, and the supplementary reports which may be requested as part of the reserve factor calculation, provide valuable additional information for understanding and reconciling reserves calculated by AXIS based on Volumes table or seriatim data.

The Valuation Factor Recalculation batch generates a file of reserve factors per unit by issue age and duration based on a specified set of Cells in the current Module of the current Dataset. You may specify the issue year or years associated with the valuation factors which will affect any valuation assumptions based on calendar years. You may choose to apply valuation assumptions defined for any of the three reserve types defined in the cells (statutory, second or tax) and may override the reserve method to be used. You may generate files of terminal reserves, mean reserves and valuation premiums on a gross or net basis, or both, and may also specify several files of byproduct factors. 

You may also request two additional reports associated with the valuation factors calculated:

  • Reserve Components Report

    For various reserve methods, a breakdown of the PPM reserve for each issue age and at each policy duration is presented showing the present value of each major income and outgo component, and any final adjustments applied to determine the calculated reserve. A special report format is applicable for US GAAP FAS60 and FAS97 reserve components.
  • Reserve Reconciliation Report

    For various reserve methods, the reserve reconciliation report tracks the annual accumulation of the starting reserve per unit for each issue age through each policy year, showing the major cashflows, interest adjustments and impact of survivorship in each year.  A special report format is applicable for US GAAP FAS60 and FAS97 reserve reconciliation.

These additional reports are stored in ASCII files (PRN extension), according to path names and file names specified by the user, and may also be output as database tables to the import/export database, or to PDF files.

6. Standard Calendar Year Projection reports

Calendar Year Projection reports are probably the most commonly used of the available reports in AXIS because of the levels of detail which are available, and because they present realistic, volume-weighted, financial information aligned to actual financial reporting periods (e.g. calendar months, quarters, years). These reports can be extended up to 100 years and the user may choose how many years in total to calculate and for how many of those years to capture the monthly/quarterly reporting details. For example, in the Regular Life Cell, the vendor supplied versions of the Calendar Year Projections has over 160 lines, and more than 150 additional precalculated lines can be added using custom report options.

Calendar Year Reports display calculated values for the Cell in total, whether the Cell is calculated on Volumes Table Data, Seriatim data or combinations thereof. Note that any individual seriatim record can also be selected and Cell reports then can be run reflecting just the results contributed from that record. If Calendar Year Projection values are needed for multiple seriatim records, however, special Seriatim Reporting options described below should be considered.

The Calendar Year Projections can be further modified by sending the reports to an Excel File, or by storing the reports in the import/export database, and sending to external file formats from there. Standard Windows copy commands can extract part or all of a report for pasting into any Windows application. AXIS provides a sophisticated charting options to prepare colourful graphical views of selected vectors of data. You can also query the reports stored in the import/export database, or prepare Summary Reports which extract information from these reports.

7. Custom Calendar Year Reports

In addition to the Vendor-defined Calendar Year Projection reports, you can use the custom reporting option to design your own versions of these reports, drawing from hundreds of available precalculated lines, or creating your own Calendar Year Row Formula lines which are defined utilizing the precalculated detail lines. Custom reports can be used to calculate values that AXIS does not directly show in the vendor-defined reports, to produce smaller focused reports, or merely to relabel existing lines using titles more consistent with your reporting practices.  Once custom reports are defined, they can be selected and viewed at any time without having to recalculate the underlying AXIS Cells, since all the calculation details required are saved with any recalculated cells.

Custom Calendar Year Reports are a good way to refine or limit projection information that is stored in the import-export database or transferred outside AXIS in any of the ways described above for vendor-defined reports.

8. Policy Year Timing Option in Calendar Year Projections

While Calendar Year Projections provide realistic financial information, it is sometimes preferable to work with results developed on a policy year basis, particularly when reconciliation of component lines is required. A policy year orientation also may be used for profitability analysis of new business when time zero measures are important.

AXIS offers a Policy Year timing option in Calendar Year Projections which allows the user to combine the detail and flexibility of calendar year reports with the simplicity and ease of reconciliation of the policy year orientation. This option is activated by running a model defined in a Volumes table with the Timing of Issue switch in the Processing Section set to option (33) "Policy month coincides with financial month". With this option, all issues are assumed to occur exactly at midnight of the financial year end, and both the year start and year end cash-flows and the corresponding year end terminal reserves are reflected within the same "financial" year. While this is an artificial timing of cashflows, the results can be useful and are much easier to reconcile than the more realistic calendar year reports.

9. Seriatim custom reports

Calendar Year Projections developed at the Cell level, interactively or in batch, will reflect all Volumes Table and/or Seriatim business included in the run. For detailed information on each seriatim record inforce at the Valuation date, Seriatim Summary Reports and Seriatim Calendar Year Reports are useful. Seriatim Summary Reports and Seriatim Calendar Year Reports are named and saved objects that the user creates, by selecting the desired contents from a list of available fields.

Seriatim Reports may only be run as part of a Batch Cell Recalculation and the resulting tables of seriatim results, must be stored in a designated import-export database. From the database, they can be viewed directly, exported to other file formats, or included as source data in a Query. Queries may join Seriatim Reports with Policy Information tables or any other external database tables with consistent seriatim record ID's.

Seriatim Calendar Year Reports in particular should used with discretion as the amount of data created and saved in a report can exceed the number of fields allowed in a database and the physical limits of files stored on PC's depending on the number of discrete financial periods (months, quarters, years) projected, the number of seriatim records run and the number of lines in the report. When larger reports are required, you may also choose to export seriatim custom reports to certain external server-based Databases (e.g. SQL Server), or to Codebase Databases on your PC, either of which can enable higher capacity storage of these reports.

10. Seriatim Processing Options

When it is necessary to reconcile or study in detail the reserve or any other element of the financial projections for a specific seriatim record, this may easily be done interactively from within the Cell Assumption screen by using the seriatim processing option while viewing the seriatim record list. Select any record in the list by scrolling to it and clicking on it, or use the Find function and search for the Policy ID of the record.  Next click on the Process button in the Action Bar. AXIS will process Calendar Year Projections or Policy Year Results as selected in the cell, and the report displayed will reflect just that seriatim record. You may adjust the Preferences to insure sufficient precision is displayed for the single record results. Note that the normal Custom Calendar year reporting option will allow you to focus on specific details and calculation bi-products as necessary.

Using this feature it is easy to enable and disable various options in the Cell Assumption screen, as necessary, to reveal the incremental impact on results for that one policy. If the assumptions or options are not controlled by the Cell assumptions, but by the Optional fields in the seriatim record, you may also edit the seriatim record and set individual optional field values or table selections to different values, or temporarily ignore specified optional fields. After editing, if you click on the Process button, the calculated results will reflect the edited values of those optional fields. You may also edit the mandatory fields in this way, but you may not set these fields to be ignored. All changes made to a seriatim record in this way are purely temporary for the purpose of testing the impact of the current field values, and the changes are lost as soon as a different record is viewed or the record list view is closed.

Another option to adjust seriatim data and test the impact of the changes is to use a special Batch override formula called a Seriatim Override.  These powerful overrides allow you to test each seriatim record attached to the Cells and selectively adjust any mandatory or optional scalar fields found.  A seriatim override used as part of an Override Set is a temporary change to the seriatim data for purposes of testing the impact of that override, but Seriatim Overrides can also be used on a standalone basis to permanently update seriatim data in the Cells.

11. Summary Report

Users can choose to export virtually any report in AXIS directly to an Excel spreadsheet, or may use Windows Copy and Paste commands to transfer segments of such reports. Excel is a common spreadsheet format that allows for convenient customization of a report format, or further refinement and adjustment of the results. And it is a widely-supported document format that can assist in distribution or further consolidation of results.

However, there is also a free-form, spreadsheet reporting option directly available in AXIS called the Summary Report. This report not only has formula-based cells, and user control over font style, colour and size, it also has the following advantages:

  • it is a named report object that can automatically be created and printed in a batch, or viewed after any cell recalculation
  • it includes powerful financial functions and formulas that work directly on user-selected calculated lines from the calendar year projections
  • it supports embedded queries to extract and organize tabular information from AXIS DataLink tables, import/export database tables, or other queries
  • despite its freeform format, selected fields may be exported to the import/export database, interactively or as part of a batch process
12. Queries

Queries are tabular reports extracted from databases. In AXIS, queries can extract data from the DataLink database within each dataset, or from external import/export databases, which are stored in Microsoft Access format. Queries in AXIS may also be used to report on Assumption data used within the AXIS dataset, seriatim data attached to the Cells by previous DataLink processes, or the results of another query (Query on Query).

Queries are most commonly used to report on seriatim information, as they are a powerful way to selectively pull out important fields from records that meet desired selection criteria, logically joining multiple tables as required, and grouping or modifying the selected data in flexible ways. AXIS Batch processes that are used to perform Calendar Year Projection Recalculation can also create Custom Seriatim reports in database format. You can use Queries to link these calculated reports to the original Policy Information DataLink Tables to handle most seriatim reporting needs.

Query results can be stored in tables within the Dataset, printed directly, reformatted and printed through Summary Reports, exported to Excel or the import/export database, or used as the source for another query.

13. Comparator

Calendar Year Projections can provide a detailed breakdown of the projected cashflows, reserve calculations, required surplus results, and other values over the entire projection period. The Comparator tool provides a fast and powerful tool for comparing the financial projections resulting from two different processing runs, assessing the magnitude of any change in results and isolating the specific values that have changed. This can be useful in testing and understanding the differential impact of a change in method or assumptions. It can also help determine whether a software update has caused any significant change in results for the same assumptions and if so, what component of the calculations is causing the change.

The Comparator is run directly from the Import-export database. To use it, you must export two copies of the same projection report, either vendor supplied or custom to the same table of the same import-export database, with the option to append results selected in the second one. It is not necessary that the two runs be generated using the same version of AXIS or even that they are run from the same computer or the same dataset. Then when you view that table of Calendar Year Projections from within the Import-export database, you may choose the Analyze option to compare the results.

14. Other Tips and Techniques

  • Consider running AXIS multiple times with overrides to study impact of specific changes in assumptions, exporting the same detailed report to the import-export database and using the Results comparator to compare the various runs. This may be useful to obtain more detailed results than is available in calculated Calendar Year Projection lines. e.g. modify the expenses table to include/exclude specific expense factors to identify their differential impact on expense, saving the changed assumptions in a new table and use an Override to test the impact.
  • Consider zeroing out all decrements (pricing decrements of mortality, lapse and other benefits, in particular) in order to use Calendar Year Projection lines to reflect projected inforce values consistent with an illustration run. This obtains values at calendar month and year durations instead of full policy year timing as in an illustration.
  • Consider using a Keycode to use valuation assumptions for pricing, so that the projected cashflows will correspond to the assumptions used in the statutory reserves at the start of each period. In the absence of new business, this should produce zero profits for PPM with exact mean reserves, provided all assumptions are used with no final adjustments. If Pricing corresponds to unMadded valuation assumptions, then Profits for inforce business should reflect only the release of PFADS from all assumptions.

Although the list of available tools in AXIS is long, we are always looking at further improvements. If you don't see what you want, please ask.

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