As for a defined benefit pension plan in Korea, Employee Retirement Benefit Security Act(ERBSA) require that the retirement benefit to be paid out to qualified members is pre-defined in such a lump-sum form that at least 1/12 × annual salary at retirement × duration-year of work service. And also, funding period and pensionable period each are clearly distinct and independent. Considering these two characteristics, we focus on deriving an actuarial liability and normal cost using projected unit credit method(hereafter, simply denoting PUM) for the reason that PUM is recommended by IASB a unique funding method in company pension plans and yet this method is not popular and even not well studied. So, we show firstly its funding mechanism and then derive 6-type dynamic actuarial models characterized by linear first-order recursive equations, respectively. Next, our numerical illustrations indicate that each of age-specified actuarial liability and normal cost calculated by PUM, depend largely on the difference between salary growth rate and valuation interest rate(called net interest rate) and also the age structure of workforce makes a great potential impact on the financial burden on sponsoring employer because of the normal cost by PUM being similar to natural premium. Lastly, this paper could give an efficient and admissible funding solution to our financial institutions authorized as pension plan administrator.
The objective of this paper is to develop the earning presentation method of life insurers under fair value accounting. The life insurer is required to revise the reserve on every valuation date and report "Market Value Margin" separately under the fair valuation method. These requirements make it more difficult for users to understand financial statements. Also, there is concern about the reliability of fair value reporting dependent on management’s estimates. The adjusted "Sources-of-Profit (SOP)" analysis is developed to resolve these problems. First, this paper provides a framework for earning presentation under fair valuation. Second, several formulae are developed to decompose the framework by SOP factors such as mortality rate, withdrawal rate, expenses and interest rate. Lastly, some application of the adjusted SOP analysis is provided. The adjusted SOP analysis decomposes life insurer’s profit under fair valuation by SOP factors representing underwriting, investment and expense management. Therefore, this analysis provides valuable information for management and outside users.
According to Art. 731(1) of Korean Commercial Code, the policyholder must acquire the insured's authorization before making the insurance contract under which the policyholder differs from the insured. The case of 2005Da11612, 11619 held by Korean Supreme Court related with the interpretation of the above Article. This article deals with major issues of the decision: first, whether the insurance contract is interpreted as still void even though the policyholder acquires the insured's authorization after its conclusion, and whether the above article needs to be reformed as providing that the insurer be not allowed to claim the voidness of the contract when the policyholder omitted the insured's authorization before the time provided because of the failure by the insurer's intermediary to explain to him the requirement of the authorization but acquires it afterwards; second, whether the recognition of the intermediary's duty to explain is desirable, and if so which is its legal basis, and whether the requirement of authorization could reasonably be an object of the duty to explain; finally, some legal issues surrounding the insurer's responsibility to pay damages when its intermediary neglected to explain the requirement to the policyholder when mediating the insurance contract.