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New Initial Asset Position Functionality (March, 2016)

Article Summary:

In AXIS version 2016.08.01, we have changed the Asset Generate functionality to make it more flexible and transparent to the user. This document outlines the changes as well as the rules for converting existing Funds and Batches to this new functionality. The conversion process is fairly complex, so it is recommended that users review the “Conversion Details” section of this article before converting their datasets.


Changes in Fund Assumptions

The functionality to generate the initial asset position in AXIS (either for CALM or to match a starting balance) has been moved from the “Generate” button in the Fund Assumptions to the “Initial Asset Position” section in the Fund Assumptions.

The old asset generate interface is still maintained temporarily under Feature Code to be removed #499 – Use Old Initial Asset Position Generation Set Up.

The starting asset adjustment methods are still the following:

  • Adjust starting cash
  • Scale Existing Assets
  • Adjust scalable assets limited between 0% and 100% then cash

To make the setup more transparent, these adjustment options are now available in a new switch in the “Initial Asset Position” section, called “Initial Asset Position Adjustment”.  Note:  The adjustment method is no longer dictated by the “Method” switch at the top of the “Initial Asset Position” section. 

Also, another big change is that initial asset position adjustments are only available for the following Initial Asset Position “Method” settings:

  • 3 - Inv assets + policy loan + sep acct + net margin acct + cash
  • 4 - Inv assets + policy loan + sep acct + net margin acct + fund amort + cash

We have also added a new field, “Initial cash”, where you can input a starting cash position in the projection for Method 3 or 4.  If your adjustment method is set to “Adjust starting cash”, then this is the field that will be adjusted.

The generating assumptions are available below the “Initial asset position adjustment” switch when any of the starting asset adjustment options are selected. Here is a screenshot of the new “Initial Asset Position” section in AXIS:

The following Initial Asset Position “Method” settings will continue to function as before, but will not be impacted by the “Initial Asset Position Adjustment” switch:

  • 0 - Use total assets from the liability subfunds
  • 1 - Input the initial free surplus for this block
  • 2 - Input the initial total asset for this block
  • 5 - Total asset = X% of specified reserve + Y% of specified required surplus

A new option “2 - Generate initial asset to achieve zero target value in formula table below” has been added to the “Objective function” switch. This option allows users to generate a starting asset position based on a zero target value defined in the Target value formula table, which offers users the flexibility to customize how the target value is to be calculated. Below is a screenshot of the new option:

Below is a screenshot of a sample Target value formula table:

Changes in Batch Assumptions

The specific generation settings are no longer set in the Batch Testing batch.  Instead they are read in from the Fund.  The “Generate Options Source” page of the Batch Testing wizard does provide an option to ignore the generate options set up in the Fund assumptions.  On the “Generate Options Source” page of the batch testing batch, there is still an option to save the adjusted results to the Fund assumptions screen.

Fund generate reports (both simple and detailed) can still be generated by the batch.

Here is a snapshot of the new “Generate Options Source” page of the Batch Testing wizard:

Conversion Details

Override Conversion

Any Fund Override with Initial Asset Position method set to the following methods will be blocked:

  • 2 - Input the initial total asset for this block
  • 3 - Invested assets + policy loan + sep acct + net margin account

Batch and Fund Conversion

AXIS will first scan the dataset for all funds and batches that select them.  If any of the following occurs, then AXIS will treat the dataset as “inconsistent”:

  • Any Fund has Initial Asset Position method set to “2 - Input the initial total asset for this block” and is used in a Fund Batch Testing batch that generates the initial asset position.
  • Any Fund is selected by multiple Fund Batch Testing batches, and in those batches, the settings in “Step 3 – Generate Options” are not exactly the same.  This means:
    • Some batches are set to “generate initial asset positions”, while some are not
    • Or the generating assumptions are not the same

If the dataset is “inconsistent, then all Fund Batch Testing batches will set the new switch “Initial asset position” in “Step 3 – Generate Options Source” to be “Is adjusted using assumptions in batch”.  And the original Initial Asset Position assumptions will be moved to “Step 4 – Generate Options”.

If the dataset is “consistent” (meaning it is not “inconsistent”), then AXIS knows all Funds are used consistently, and AXIS will convert the funds based on their original Initial Asset Position setting in “Step 3 – Generate Options” of the old batch before conversion.  All the Fund Batch Testing batches after conversion will set the new switch “Initial asset position” in “Step 3 – Generate Options Source” to be “Is adjusted using assumptions in fund”.  Everything should run as usual, and no Feature Code will be required.

Frequently Asked Question:

I currently do an asset position generate with the “Method” switch set to “2 - Input the initial total asset for this block”.  How can I do that now?

This can now be accomplished by setting the “Method” switch to “4 - Inv assets + policy loan + sep acct + net margin acct + fund amort+ cash” and setting the “Initial asset position adjustment” switch to “1 – Adjust by cash”.  Note that the Fund Generate report for this option will now show the additional starting cash required, not the total assets.  The total assets can be obtained through a summary report, if that is the metric you need.

I currently get conversion error “0 – Job reference 43163” when upgrading my dataset from version before 20160702.  What should I do now?

This means your dataset is “inconsistent” as mentioned above. In order to preserve the generating features of the funds and batches, you can do the following:

First, find all the funds and batches that are stopped by the conversion.

Case I: If the fund has Initial Asset Position Method switch set to “2 – Input the initial total asset for this block”, and it is selected in a Fund Batch Testing Batch with generating options. Then, do the following:

  • Set the fund Initial Asset Position Method switch to “4 - Inv assets + policy loan + sep acct + net margin acct + fund amort+ cash”
  • Set the Initial asset position adjustment switch to “1 – Adjust by cash”
  • Set all the other generating options below Initial asset position adjustment switch from the batch “Generate Options” step, including:
    • Objective function
    • Target value
    • Target value basis
    • Tolerance
  • Set Initial asset position switch in batch “Generate Options Source” step to be “Is adjusted using assumptions in fund”

Case II: If the fund is selected in multiple Fund Batch Testing Batches with inconsistent generating options, fund override object can be used to set generating options for each batch “Generate Options” step. For example, Fund 0 is selected in Batch 1 (generating options set 1), Batch 2 (generating options set 2), Batch 3 (no generate).

  • Create Fund Override 1 with all generating options from Batch 1
  • Create Fund Override 2 with all generating options from Batch 2
  • Do nothing for Batch 3
  • Set Initial asset position switch in batch “Generate Options Source” step to be “Is adjusted using assumptions in fund” for Batch 1 and Batch 2

If Fund 0 has Initial Asset Position Method switch set to “2 – Input the initial total asset for this block”, then set Fund Override 1 following Case I.

If Fund 0 has Initial Asset Position Method switch set to “3 - Inv assets + policy loan + sep acct + net margin acct + cash” and the checkbox “Limit the proportion of invested assets to between 0% and 100%” in batch “Generate Options” step is not selected, then

  • In Fund Override, set the Initial asset position adjustment switch to “2 – Adjust scalable assets with no limit”
  • All other generating options in Fund Override should follow batch “Generate Options” step

If Fund 0 has Initial Asset Position Method switch set to “3 - Inv assets + policy loan + sep acct + net margin acct + cash” and the checkbox “Limit the proportion of invested assets to between 0% and 100%” in batch “Generate Options” step is selected, then

  • In Fund Override, set the Initial asset position adjustment switch to “3 – Adjust scalable assets limited between 0% and 100% then cash”
  • All other generating options in Fund Override should follow batch “Generate Options” step

If Batch 1 or Batch 2 has fund override, then follow the previous step but the Initial asset position adjustment switch should be set based on Initial Asset Position Method in the Fund Override itself, not the one in original Fund 0. And all other generating options can be simply added to the override.

 

 

 

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