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US Tutorial Prophet

Prophet modeling US tutorial

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US Tutorial Prophet

Prophet modeling US tutorial

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Tomas Llibre

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Introduction to

Prophet Tutorial

U.S. Library (2012)

This tutorial is based on Prophet version 8.0.

(Copyright 2012 Actuarial Resources Corporation. All rights reserved.

This document and the software described within are copyrighted with all rights reserved. No part of this document may be reproduced, transcribed, transmitted, stored in an electronic retrieval system, or translated into
any language in any form by any means without the prior written permission of Actuarial Resources Corporation. ARC makes no warranties, express or implied, in this document. In no event shall ARC be liable for
damages of any kind arising out of the use of this document or the information contained within it.
This document contains information that is confidential or proprietary to ARC and SunGard Data Systems Inc.
By accepting this document, you agree that: (1) if there is any preexisting contract containing disclosure and
use restrictions between your company and ARC or SunGard, you and your company will use this information
in reliance on and subject to the terms of any such preexisting contract; or (2) if there is no contractual relationship between you and your company and ARC or SunGard, you and your company agree to protect this information and not to reproduce, disclose, or use the information in any way, except as may be required by law.
TRADEMARK INFORMATION
SunGard, the SunGard logo, iWORKS, and Prophet are trademarks or registered trademarks of SunGard Data
Systems Inc. or its subsidiaries in the United States and other countries. All other company, brand, and product
names mentioned herein may be trademarks or registered trademarks of their respective owners.
Trademarks that are known and mentioned in this manual have been appropriately capitalized. However, SunGard cannot vouch for the accuracy of the information. Use of such terms in this manual should not be regarded as affecting the validity of any trademark.

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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

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

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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.

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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 AutoScan.
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 tutorial 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 parameters contained in a dialog or interface window may be described subsequent to the illustration.

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3
L E S S O N

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

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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 actuarial 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 maturity.
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 factor 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.

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

Product details

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 credited 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.

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Lesson 1: Setting up a simple product

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

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, although it may appear differently or not at all depending on how user permissions have been set for your installation 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 workspace a description of Prophet Tutorial.
Click

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

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Main View

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

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, Parameter 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.

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Lesson 1: Setting up a simple product

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

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 mortality, 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
menu you will see:

. Upon opening the drop down

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

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Creating the product

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

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 being 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 retain 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

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Lesson 1: Setting up a simple product

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

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 category.

The outline in the left pane displays the categorization of the indicators. If you highlight one of the categories (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 description. 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.

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Selecting the indicators

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

If you click
, an Indicator Selection Wizard will walk you through the indicator categories to select 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 indicators 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
VALIDATION
UL_FLEX_PREM
STAT_CRVM
Click

TAX_CRVM
DISC_PROFITS
RBC

to accept these indicators.

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Lesson 1: Setting up a simple product

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

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 calculations. 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
. Then
GANN_PREM_PP (guaranteed annual premium per policy). First, click
. When the list of variables in the library is displayed select the first variable on the
double-click
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.

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

Specifying the input variables

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 definition 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 explained:
End characters

Description

_PC

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

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

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

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Lesson 1: Setting up a simple product

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

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 accepted 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 divider 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 column headings. For the tutorial product, click the Code column in the top pane to order the variables in ascending 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:

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Specifying the input variables

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

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.

. As part
Accept this definition of Model Point and move to the next variable in the product by clicking
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
variables to accept their default definitions.

POL_TERM_Y (policy term in years) is defined as a formula. Click

Click

for both

to accept the default definition.

to accept the default definitions of ADD_TERM_M and PER_TO_VAL_M.

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Lesson 1: Setting up a simple product

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

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

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 variable PER_PREM_PU is normally read from a table or a constant that specifies the current or original premium, whereas ANN_PREM_PP is given a formula definition, which can be used to specify how the premium varies over time.

Change the variable PREM_SUSP_PC to 5 and click

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

Click
Variable

Description

PREM_SUSP_PC

Premium suspension rate

PREM_SUSP

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

Annual Policy Fee

SALES_TYPE

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 default 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 define the guaranteed interest by policy. To do this, click

and you will see the following dialog:

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Specifying the input variables

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

. Click

Select Model Point and click

to move forward to the next variable.

to accept the default definitions for GUAR_PER_END and G1YR_INT_PC. These are used to
Click
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.

to accept the default definitions for each of the next specified variables: CRED_INT_OPT,
Click
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 exponential 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
to keep the default choice to use the exponential formula.
tables are converted to monthly rates. Click
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

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Lesson 1: Setting up a simple product

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

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

to accept the default definitions for each of the next specified variables: GLD_TPRM_PC,
Click
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
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
DB_CORR, and click

for DEATH_BEN_PP and

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

to accept the default definition of 2 for ELRA_IND.

Actuarial Guideline XVII for this product, so click

VAL_PREMCONT can also remain as is, so click

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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.

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

Click

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:

Variable

Description

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
ue.

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

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
click

, and then click

, select Parameter,

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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.

Variable

Description

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
2.5; click

. Then enter DISC_A_PC -

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

Change the definition of PREM_TAX_PC to 2, and click

to keep the default definition.

to accept the change.

to accept the default definition of DIFF_EARN_PC.

Click

Change OTAX_PROF_PC to be read from a global table. Click

and then click

, select Global, click

to accept the default definitions of the next three variables.

Click
Variable

Description

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

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Specifying the input variables

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

Description

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 following 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 percent of excess premium) to a constant 5, and then click

Accept the default definitions of the last specified variables.

Variable

Description

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

Initial commission earned on death

IC_RECOV_IND

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

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Variable

Description

RC_PAYBL_PP

Renewal commission per policy

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

Expenses
Next is the J - Expenses section. ACQ_FIXED is the first variable and determines the fixed acquisition expense 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
: ACQ_PER_UNIT, ACQ_COMM_PC,
default definitions of the next specified variables by clicking
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.

Variable

Description

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
.

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

Click

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

Variable

Description

MNT_COMM_PC

Maintenance Expense as a percent of Commission

MNT_RESRV_PC

Maintenance Expense as a percent of Reserve

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Specifying the input variables

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Variable

Description

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

Expense per Lapse

PW_EXP

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

Calculated Expenses associated with Lapses per Policy

PW_EXP_PP

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.
, select Parameter, click
Click
the next lesson.

, and then click

. The parameter value will be set in

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.

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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 status 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:
Variable

Description

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

Annual maturity rate

PW_TIMING

Partial Withdrawal Timing

PW_PC

Percent of max FPW taken as Partial

PW_FIRST_MTH

First month PW is allowed

PW_USE_PC

The portion of Policyholders making PW

ANN_PW_PC

Annual partial withdrawal percentage

PW_MTHLY_PC

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

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Specifying the input variables

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.
Variable

Description

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

Inflation rate used in ALM run

LT_IL_RT_PC

Long Term Inflation Rate

INFL_INDEX

Index used to calculate inflation

INFL_IDX_ST

Inflation used at the start of the projection

INIT_IL_IDX

Initial Inflation Index

CX_INDEX_PC

Competitor Index Rate

PORT_ARET_PC

Annual return on assets in ALM run

CS_LINKAGES

Crediting Index Linkages

IL_LINKAGES

Inflation Rate Linkages

CX_LINKAGES

Competitor Index Linkages

PY_LINKAGES

Portfolio Yield Linkages

LOB

Line of Business (Portfolio Name)

LINKAGES

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 sections. 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.

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Variable

Description

RBC2_NAR_PC

This is the percent of net amount at risk held as the C2 component of risk-based capital; 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
to return to the list of input variables. First sethen be used for all these variables. Instead, click
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

folder to reveal your product. Select your product, N___UL.

and expand the Products

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:

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Specifying the input variables

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.

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29
L E S S O N

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.

TOPICS COVERED IN THIS LESSON

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Lesson 2: Setting up a structure, a run setting, and tables

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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 contains 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

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Setting up a structure

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

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

be presented with the following:

at the top of the screen and select New Structure. You will then

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

on the Products / Accumulations tab.

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Lesson 2: Setting up a structure, a run setting, and tables

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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
to seselected for this structure. Highlight the N___UL Tutorial Product entry and double-click or use
.

lect it; then click

. The Select Accumulations window allows results from one or more products to
Next, click
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.

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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.

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The Future Accumulation Period is the number of years of projected results included in the results files produced 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 calculated. 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 rather 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 calculations. 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
will make sure the file directories specified exist.
workspace location. Clicking

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Setting up a run setting

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 projection period split by maturity year or current age.

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

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Lesson 2: Setting up a structure, a run setting, and tables

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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 generated.

Cumulative

Results are generated that contain values for all the variables that have had their cumulative 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 being 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 calculations 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 terminates 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 occur.
The model point file you are using for this product contains only one model point so you will only want results 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.

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Setting up the model point file

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

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.

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Lesson 2: Setting up a structure, a run setting, and tables

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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.

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Setting up the model point file

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.
Variable

Description

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 total 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 modeling 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

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Lesson 2: Setting up a structure, a run setting, and tables

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

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Setting up a parameter file

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Setting up a parameter file

Parameter files are two-dimensional tables that contain constant values indexed by product name and variable 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 parameter 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.

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Enter the values for these variables as follows.

Variable

Description

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.

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Setting up a parameter file

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.

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Lesson 2: Setting up a structure, a run setting, and tables

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Setting up a global file

Global files are two-dimensional tables that contain constant values indexed by variable name and run number.

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

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Setting up a global file

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:
Variable

Description

ALM

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

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Variable

Description

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.

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47
L E S S O N

Running a product and reporting results

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.

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Lesson 3: Running a product and reporting results

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Running the product

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

Then select Descriptions:

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Running the product

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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 Description. 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 clicking .

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
will see the following dialogue.

Click

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and you

Lesson 3: Running a product and reporting results

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Prophet first carries out various checks such as ensuring that all the model point files exist for the products included in the run and that the global and parameter files specified in the structure exist. If not, a warning is produced.
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 generation, 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 required 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 progressing.
Prophet fails to complete the first run attempt, however, and displays an error message.

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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.

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Lesson 3: Running a product and reporting results

Click View then click

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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 format 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:

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Identifying why a run has failed

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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 definition indicates that the SEX, SMOKER_STAT, and CLASS_CODE variables are used to vary data in this table. 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 entering 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

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Lesson 3: Running a product and reporting results

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In the first numbered row, enter the name of the three index variables, SEX, SMOKER_STAT, and
CLASS_CODE. In the same row, under VAR_NAME, enter CURR_COI_TBL and GUAR_COI_TBL in
each of the columns. You will need to right-click GUAR_COI_TBL and select Variable Properties from the
drop-down menu. You should see:

Click

to remove the Constraints on the fields. Click

Then, for the three index variables (the first three columns), select or enter values to reflect all combinations
of the three variables.
Now, for each combination of index variables (for each row), assign a key used by Prophet to look up COI
rates in the mortality tables. For the tutorial, the same keys apply to the CURR_COI_TBL and
GUAR_COI_TBL variables. Each key consists of six positions:

The first two positions are filled with 80, indicating 1980 CSO mortality is used.

The next position indicates the sex: M for male; F for female.

The next position indicates the age basis: N for age near; L for age last. We will use age near.

The last two positions indicate the smoking status: NS for nonsmoker; SM for smoker.

The process is most efficient when using copy and paste techniques. When complete, the window should
look something like this:

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Identifying why a run has failed

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When finished, click

Click

to accept the Table Location and File Name. Close the table tab and Save your product.

Now with your product selected, click

and then click

Scroll down in the run log to observe that another error has been detected, this time in the variable
Q_VAL_TBL. The error message reads:

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Lesson 3: Running a product and reporting results

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Exit the Runlog Viewer and then click

on the Run Monitor dialogue in order to return to the
Main View window. Open your product and locate and select the Q_VAL_TBL variable. In the formula
definition displayed for this variable in the bottom pane, notice the Mortality_Table_Mappings, Y,
SEX, SMOKER_STAT, CLASS_CODE, and VAR_NAME parameters. Highlight and copy (CTRL+C)
Mortality_Table_Mappings to the Windows clipboard.
Select the Find option on the Edit section.
Paste (CTRL+V) Mortality_Table_Mappings in the Find What parameter, and select the Match Case option.

to locate all instances where Mortality_Table_Mappings occurs. Three variables are found
Click
using this parameter.

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Make note of the three variables, and click

Identifying why a run has failed

to close the dialog box.

With the Q_VAL_TBL variable selected make note of the variables referenced in Q_VAL_TBL. Similar to
the process already described, create a table that assigns keys for these three variables and save it as
TABLES\Mortality_Table_Mappings.fac. Enter Tutorial Mortality Table Mappings in the Description parameter. The size of the table is the same as before, except now there are three columns under VAR_NAME
to contain actual data (one for each of the three variables). You will need to delete the constraints for
Q_EXP_TBL, Q_VAL_TBL and Q_TAX_TBL as well. For the tutorial product, assume all three variables
use the same mortality table keys. Save and close the table. When the mortality table mappings table is created, save and run the product again.
The following error message should read:

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Lesson 3: Running a product and reporting results

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When this message is displayed, the run log can be viewed by clicking

Click on View

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Identifying why a run has failed

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Click on

and then on

. You will see:

This error indicates that an invalid time period has been referred to.
Close the Run log viewer and the Run Monitor, and locate the COMM_TARP_PC variable in the Input Variables window.
Upon reviewing COMM_TARP_PC, you can see that the first part of the formula defines the value at t = 1,
the second part defines it whenever t+11 is a multiple of 12, and the last line tells it to use
COMM_TARP_PC(t-1) everywhere else. It is a recursive formula, which is necessarily evaluated by starting at t = 0 and moving forward one month at a time. However, at time 0 (when the error occurred), this
formula will reference the value at t = -1. As t can only take on positive values, this term has caused the error. This can be rectified by opening the variable and replacing the first line with the following:
IF t = 0 THEN
0
ELSE IF t = 1 THEN

Click

to accept the variable definition and

to save the product.

Run the product again. You should now see that the product has been run successfully. Click
close the run log window.

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Lesson 3: Running a product and reporting results

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Viewing results produced in a run

The run has been completed and the results stored on the hard disk. To look at the results, you first have to
specify the three characteristics that are located in the drop-down lists below
. Select folder Results then RunNumber: 1 then ResultType: Projection and finally double-click N___UL00.projection.

The Run Number value should be 1- Liabilities because this is the only run number you have run so far.

The Sub-Product gives a choice between 0 Total Business and 1 Existing Business. Select 1 Existing
Business.

The Type can be used to choose which type of results you want to view:
Projection
NB Profile
Valuation Maturity Year
Valuation Current Age
Unit Numbers
Select the Projection option, if it is not already selected.

At the top left, you see the Run Number, Sub-Product, and Type that you just selected, along with the Product name. If you want to change one of these parameters, you can use the appropriate drop-down list to
make a different selection. The results on the screen will change to reflect your selection.

Variable Groups
In the Variable Group section, there are Category and Name options. Using the Category drop-down list,
you will see a number of variable group categories and two additional options. The additional options allow
you to select <All Variables> or <Cumulative Variables>.
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Viewing results produced in a run

Each Variable Group Category contains a number of variable groups that allow you to report on a particular
aspect of the results. The standard workspace includes a number of variable groups, which are listed in the
Name drop-down list. If you select a Variable Group Category, the drop-down list next to Name is opened
so you can select the required variable.
Select W - U.S. Reports in the variable group Category drop-down menu. Then choose W05 - U.S. Full Income Statement in the Name drop-down list.
To specify the time periods for which the results are displayed, click
displayed:

. The following dialog is

Start Position allows you to display the results from the start of the results or from a specified start year.
Format allows you to display the results in company year or policy year format:

Company Year displays time periods in the form: Dec 2005, 4Q2005, 2H2005, 2005, or 2005-2009.
This is a more appropriate form for model office work.

Policy Year displays time periods in the form M12, Q4, H2, Y1, or Y1-Y5. This is a more appropriate
form for product development work.

You can choose to display results Monthly, Quarterly, Half-Yearly, Annually, or 5-Yearly for a specified
number of years. If, for example, you choose 2 for Monthly, then monthly values will be displayed for 2
years. You can also choose to display a summary of the results for each year by selecting the Show Annual
Summary box.
Complete the Time Periods dialog as follows:
Item

Do this

Start Position

Select Start of Results

Format

Select Company Year

To End of Results

Select Annually

Number of Years

Enter 1 in Monthly

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Lesson 3: Running a product and reporting results

Item

Do this

Show Annual Summary

Select

Click

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Results
The remaining body of the results window displays the results. It is divided into three tabbed sections:

Values for time-dependent variables

Constants and other non time-dependent variables

Audit Information

You can change the format for the display of the results by right clicking the results and selecting the desired
format change from the drop-down menu.
You can also choose to display either the variables or the time periods as the columns. To switch between
them click
in the corner of the grid of values. For the tutorial, set the display so
that the variables are in rows and the time periods are in columns.

Copying Results
If you want to copy results (to Microsoft Excel or Word, for example), you can right click the table and
select the Copy, Copy Grid, or Copy to Excel option on the drop-down menu to respectively copy a selected
range of cells or copy the entire grid of values including the top and left borders to the Windows clipboard.

Printing results
Select the Print option on the drop-down menu by selecting

. The Print Results dialog is displayed:

Select the Grid Values, Constant Values, and Audit Information options, and then click
the results. Check and compare the printed results with those at the end of this tutorial.
Close the Results Grid tab to return to Main View.

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to print

63
L E S S O N

Reporting on dependencies in Diagram view

This lesson describes the main approach that you should adopt to check the calculations and, if required, to
modify them.

TOPICS COVERED IN THIS LESSON

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Lesson 4: Reporting on dependencies in Diagram view

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Introduction
Diagram view allows you to view all the variables and formulas in a product, the dependencies between the
variables and their values.
You will use it to:

Check some of the variable dependencies in the product; and

See how changes you need to make to the product should be implemented.

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The Product Diagram view window

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The Product Diagram view window

To load Diagram view, click

in Main View. The Diagram view window is then displayed:

The screen is divided horizontally into three sections:

Variable dependencies

Variable definition

Results values

You can adjust the size of any pane by dragging its borders. You can also expand the panes to the whole
width of the screen by dragging the partition between the panes. The results pane is displayed only after selecting appropriate parameters within the Ribbon (see above screenshot).

Variable dependencies
The center pane of the top section shows the direct relationships between the current variable
(MATH_RES_IF) and other variables in the product. Clicking on a variable in this pane will make the variable the current one. The current variable is also displayed in the second (Variable) drop-down menu in the
toolbar at the top of the screen.
You can also make any variable in the product the current one by selecting it in the Variable drop-down
menu. If you type in the first few letters of its name in quick succession, the first variable starting with those
letters is highlighted.
The left pane of the top section enables a tree view of the variables on which the current variable depends to
be displayed. Click the plus sign next to any variable to expand the tree.
The right pane of the top section enables a tree view of the variables that depend on the current variable to
be displayed. Click the plus sign next to any variable to expand the tree.

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Lesson 4: Reporting on dependencies in Diagram view

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Variable definition
The middle section displays the name, description, type, variable code, and definition of the current variable.
For non time-dependent variables, the value is also displayed in this section. In the case of model point variables and other non time-dependent variables that have values that vary from model point to model point,
the value for the first model point of the current sub-product is displayed.
If you move the mouse cursor over any variable in the top section, Diagram view will display information
about that variable instead of the current one.

Results values
The three panes in the bottom section show the values of time-dependent variables in your product. The
center pane shows the values of the current variable. The left pane shows the values of the variables on
which the current variable depends. The right pane shows the values of the variables that depend on the current variable.

Options
There are a number of options in Diagram view that enable you to change the way information is displayed:

If you select the Font, Number, or Time Periods options, on the Format section of the Diagram tab,
you are able to change the font, number format, and time periods, respectively, used to display results.

The Suppress Zeros option, on the Format section of the Diagram tab, allows you to suppress variables that have zero values.

In Diagram view of the Results, you can open the Prophet Application Menu
and select
Then select Diagram Options J. From here you can change the colors of variables according to their
type.

You can move backwards and forwards through a history of the variables that you have selected as the
current variable using the

toolbar buttons.

The product and the results that are displayed can be changed using the drop-down lists at the top of the
window.

The Diagram view can be printed by selecting the Print option on the drop-down menu and then selecting

Note: Spend some time moving through the variables in the product you have created, exploring the dependencies between them, and using some of the options available to you.

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Using Diagram view to identify how to change the product

In the next lesson, you will amend the tutorial product to use different valuation interest rates depending on
the valuation series to which each model point belongs.
Diagram view can help you clarify exactly which variables should be changed to make this enhancement.
The valuation interest rate is represented by the variable VAL_INT_PC. In Diagram view, use the Variable
drop-down menu to make VAL_INT_PC the current variable. Looking at its dependencies, you can see that
it is used by several variables. There are no variables to the left of VAL_INT_PC, meaning that it doesnt
use any variables. In this case, it is a constant.
You will change VAL_INT_PC to use a different valuation interest rate depending on the valuation series by
creating a new variable, VALN_SERIES, to determine which valuation interest rate is used. Close out of any
open tabs.

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Lesson 4: Reporting on dependencies in Diagram view

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69
L E S S O N

Updating libraries and products

This lesson explains how you can extend the calculations in Prophet to meet your particular requirements by
implementing the changes outlined in the previous lesson.

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Lesson 5: Updating libraries and products

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

Adding a new variable to the library

You are now going to add a new variable, VALN_SERIES, to the library. First, click
and then double click NA US. The screen will look similar to:

You have the following five main options when you have the NA US Library Preview tab open:

This button creates a new variable.

This button displays a list of the existing definitions for the selected variable.

This button closes the current variable.

This button displays properties of the selected variable and allows for changes.
This button deletes the selected variable.

This button creates a new variable based on the selected variable.

Since you want to create a new variable, click

The Variable Properties dialog is displayed:

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Introduction to Prophet Tutorial, U.S. Library (R7.3.2.20100601)

Adding a new variable to the library

Enter VALN_SERIES as the Name. Leave the Type as Number. Then enter the Description as Valuation
Series.
The other items in the Variables Properties dialog are described in the following sections.

Workspace Level Properties

Accounting type

Revenue Account means the annual values for a variable will be the sum of the twelve monthly values
(Premium Income, for example).

Balance Sheet means the annual values for a variable will be the values in the last month of the year
(Mathematical Reserve Inforce, for example).

Select Balance Sheet, if it is not already selected.

Default printed decimal places

The standard Prophet convention is to use two decimal places for monetary values and six decimal places
for actuarial functions, interest rates, etc. Enter 0 since decimal places are not needed for this variable.

Constraints
You can specify the values that a variable can have by setting up a constraint condition in the Constraints
section of the Variable Properties dialog. The constraint that you specify is then used to validate the values
that you enter for a variable in the Table Editor.
The constraints that can be specified for the variable can be one of the following:

Specified Values. This type of constraint allows you to specify the values that a variable can have, together with descriptions for each such value.

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Lesson 5: Updating libraries and products

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

Min Max. This type of constraint allows you to specify the minimum and maximum variable values,
and whether or not it can have only integer values.

A description of the type of constraint applied to a variable is listed in the Constraints section of the Variable Properties dialog.
Leave this entry blank, as we will not be applying any constraints to the variable. Since the remaining
Workspace Level Properties are beyond the scope of this tutorial, you should not select any of them.

Library Level Properties

Type
Type allows you to choose between Input and Core variables.

Input variables are used to define the specific calculations you want to make for each of your products.
When you specify a new product, Prophet displays a list of input variables to be defined based on the indicators you select.

Core variables contain the calculations that do not vary by product. Prophet automatically includes the
appropriate core variables with their appropriate definition based on the indicators you select for that
product.

Select Input for this variable.

Variable Code
Variable Code is a four-character code that controls the order in which input variables are displayed when
setting up a product. This code is made up of two letters followed by a two-digit number. Any number of
variables can be given the same variable code, but it is better to give them different codes so that they appear
in the order you want. The natural place for VALN_SERIES to appear is just after VAL_INT_PC (the valuaand search through the variables, you will see that the variable
tion interest rate). If you click
code for VAL_INT_PC is FA10. Thus, you should give VALN_SERIES a variable code of FA11. This can
be done by double clicking on VAL_INT_PC in the Select Existing Variable Code window. You will then be
returned to the Variable Properties dialog where you see that FA11 has been entered for the Variable Code.
Below the Variable Code, you will also see the descriptions for the F and FA variable categories.

Variable definitions
Click
. You will be brought to your variable in the Library. Right click your variable and select
New Variable Definition.
First, select the type of definition you want to create, using the following dialog:

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Adding a new variable to the library

Introduction to Prophet Tutorial, U.S. Library (R7.3.2.20100601)

Select Model Point and click

. The following is displayed:

This screen looks similar to the variable screen you saw when specifying the variables within the product.
The difference is the bottom part of the screen headed Indicator Expression. Here you can specify the indicator or specific combination of indicators that would bring this variable into a product. In this case, you do
not want to specify an indicator expression. This means that the variable will only be brought into the product when it is referred to by another input variable.

The next step is to change your product to use this variable. Click
able. Close this window and the library variables window.

to accept the definition for this vari-

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Lesson 5: Updating libraries and products

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

Updating the product

You are now ready to amend the product to allow for the change described in Lesson 4. You will also create
a table of surrender charges and amend the product to read values from this table rather than using the existing formula.
Open your Product. The following message will appear:

You have made changes to the library, so click

variable changes into the product.

to rescan the product. This will pull your input

Valuation series
You have set up the variable, VALN_SERIES, in the library with a default definition of model point. You
will now amend the product so that if this variable takes the value 0, the policy uses the old valuation rate; if
this variable takes the value 1, the policy uses another valuation interest rate.
To do this, you need to change the variable VAL_INT_PC. You can edit this variable in the same manner as
you did when you first set up the product by double-clicking the variable.
You can also edit the product using Diagram view. Select
left corner. The following will appear:

from the toolbar button in the bottom

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Updating the product

Introduction to Prophet Tutorial, U.S. Library (R7.3.2.20100601)

Next, double-click your variable, click

, and select Formula, if it isnt already selected. Click

. The following formula needs to be entered:

IF VALN_SERIES = 0 THEN
2.75
ELSE IF VALN_SERIES = 1 THEN
3.0
ELSE
ERROR("Invalid value entered for variable VALN_SERIES")

Click

to accept the definition for this variable.

The ERROR function in the last line of this formula will cause the run to terminate if an invalid value has
been entered for the VALN_SERIES variable (and if the run has been set up to fail at the first error). The
text inside the quotation marks will appear in the run log. Note that there is a similar function called
WARNING. This function allows the run to continue but produces a warning message in the run log and returns a value of 0.
VALN_SERIES is now shown as being used by VAL_INT_PC in Diagram view. It has been brought into the
product by referencing it in VAL_INT_PC. You chose to give VALN_SERIES a model point definition as a
default. (You may need to change VALN_SERIES to a model point definition in your product)

Generic table definition for the Surrender Charge

The scale used for surrender charges at the moment is simple and can easily be entered as a formula. In
practice, however, a table may be necessary. You are now going to replace the formula by a generic table.
Generic tables are based on a format that can be used for many different purposes.
This table will be read by the variable SCHG_FUND_PC. Find this variable in the drop-down list and doubleclick the variable. The definition type of this variable needs to be amended. Click
neric Table. Click

, and you are presented with the following:

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and select Ge-

Lesson 5: Updating libraries and products

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

Table/Variable Name
This is the name of the table that Prophet uses when finding the required values for the variable. You can
select whether to specify the table name directly or read it from another variable. Since we need to use only
one table, leave the Table Name option selected. The table has not been created yet, but you will call it
SC_FUND, so enter SC_FUND in the name parameter.

Time Allocation
You can choose either Monthly or Annually. Select Annually so that the table is only accessed once a year.

Treat Missing Value as Error

Accept the default (the box is already selected) so that if a value is missing from the table Prophet treats it as
an error rather than using a value of zero.

Index Variables
Index Variable 1
This is the variable that defines what the surrender charge rate depends upon. Set this to POLICY_YEAR.
You can type the variable name directly, use the drop-down list, or click
name from a list. The main differences between the two lists are:

(Insert Variable) to select the

The drop-down list includes special names such as VAR_NAME and PROD_NAME, which can be only
used as index variables. These arent included in the Insert Variable list because they are not true variables.

The Insert Variable list shows the descriptions for each variable, whereas the drop-down list only shows
the names.

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Updating the product

Introduction to Prophet Tutorial, U.S. Library (R7.3.2.20100601)

Index Variable 2
Set this to VAR_NAME. Prophet will then use the values in the column headed SCHG_FUND_PC in the generic table because this is the name of the current variable. Click
able.

to accept the definition for this vari-

As an alternative to defining the variable SCHG_FUND_PC as a generic table, you could have used the
READ_GENERIC_TABLE function. If you had done this, you would have used the following formula:
READ_GENERIC_TABLE("SC_FUND","Y",POLICY_YEAR,"VAR_NAME")
The terms inside the parentheses correspond to the entries Table Name, Treat Missing Value as Error,
1st Index Variable, and 2nd Index Variable. The first two arguments are text strings and require double
quotes. VAR_NAME also needs to be in double quotes because it is not the name of an actual variable. For
more information about the use of Prophets READ functions, refer to Help within Prophet.
Note: If, for the Index Variable arguments, you wish to use the values calculated for particular variables rather than the names themselves they should not be entered in double quotes.

Creating the generic table

You are now going to set up the generic table SC_FUND.FAC. Right-click on the SCHG_FUND_PC variable in diagram view and hover the mouse pointer over Open Table.

Click

Select the Generic option in the New Table dialog, and then click
played:

. The following is then dis-

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Lesson 5: Updating libraries and products

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

Enter the Description as Tutorial Surrender Charge as a % of Fund. Enter a value of 2 for the Number of
Index Variables.
Enter 100 in the Number of Data Rows parameter and 1 in the Number of Data Columns parameter. Accept
the Table Format option for the Layout. Click
the required size.

and you will be presented with an empty table of

Enter POLICY_YEAR as the header of the first column and SCHG_FUND_PC as the header of the second
column. The width of the columns can be altered by dragging the right-hand edge of the column within the
gray border area or by pressing F9 to refresh the table.
The table of surrender charges set out at the start of Lesson 1 states that the surrender charge in year 1 is 7%,
declining 1% per year until reaching 0% in policy year 8. In the first column, enter 1 in the first cell; enter
100 in the bottom cell. Then, hold down shift and highlight all cells up to and including the cell containing a
value of 1. Next, right-click on the column, and select Interpolate. This should populate the column with
values between 1 and 100. In the second column, enter the surrender charge rates that correspond to each
policy year.
Your final table should look as follows:

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Updating the product

Introduction to Prophet Tutorial, U.S. Library (R7.3.2.20100601)

Click

and the following appears:

to accept the Table Location and File Name. Then close this new table.

Return to the Home ribbon and click

to save the product. You will then return to Main View.

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Lesson 5: Updating libraries and products

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

Choosing a scenario that shows the effects of product changes

In this section, you will see how the effects of the changes you have just made can be checked.

The effect of the valuation series

To demonstrate this, you should use the Table Editor to create a new model point file based on the existing
one.

Open the table N___UL.RPT by clicking

date section. The following will appear:

. Then click

in the Up-

to add the VALN_SERIES variable to the model point file. Create a second model point by
Click
right-clicking on the first row and selecting Add Row. Then, copy the values for the first model point to the
second model point, and confirm the following values:
Variable

Model Point 1

Model Point 2

SPCODE

AGE_AT_ENTRY

SEX

Male

ENTRY_YEAR

2005

ENTRY_MONTH

July

PREM_FREQ

Annual

DUMP_IN_PREM

100000

GUAR_INT_PC

DB_OPTION

Level DB

SMOKER_STAT

Non Smoker

CLASS_CODE

TOTAL_ACCVAL

200000

TOT_VOLUME

1000000

AVG_SIZE

1000000

INIT_UNITS

1000

INIT_PREMIUM

INIT_STATRES

1000

INIT_CASHVAL

1000

INIT_POLS

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Introduction to Prophet Tutorial, U.S. Library (R7.3.2.20100601) Choosing a scenario that shows the effects of product changes

Variable

Model Point 1

Model Point 2

INIT_LOANBAL

VALN_SERIES

The first model point represents a policy for valuation series 1, and the second represents a policy for valuation series 2.
Use Save As from the Save drop-down menu to change the file name to n___ul.002.

Once you have saved and closed this new model point file, click

to rerun the product.

A stage in the process has been deliberately omitted in order to create an error in the run. Can you spot it
now?

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Lesson 5: Updating libraries and products

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

Identifying an error in the run

If you look at the run log after the run has finished, you will see the error message:
ERROR PMP008 Variable VALN_SERIES missing from model point file
This message indicates that a variable is missing from the model point file that is being read. This has occurred because the model point file extension in the Tables tab in the Tutorial run setting was not changed
from .RPT to .002 before the product was run.
It is good practice to look at the run log every time a product is run. However, if you had gone straight to
Results, the product N___UL would not have been available for selection, as there are no results to report
on.
To change the model point file extension, open the Tutorial Run Setting Run Setting and amend the File Extension for Model Point Files to 002 on the Tables tab. Now rerun the product and report on the results.
You can see the effect of the changes that were made by comparing the results for sub-product codes 1 and
2.

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83
L E S S O N

Further topics

In this lesson, you will learn about further aspects of Prophet. This should help in your general understanding
and use of the system.

TOPICS COVERED IN THIS LESSON

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

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Lesson 6: Further topics

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

Regeneration of products
Regeneration forces Prophet to regenerate the code for one or more products when it is included in the next
calculation run. Regeneration should be used in the following cases:

If you have made changes that affect only core variables, those changes will only be reflected in the
products when they are next regenerated. Using regeneration means that you do not have to rescan each
of the products concerned. However, you will still need to do this if any of the library changes affect input variables.

If you have copied libraries and products between PCs but have not copied the compiled product executable files.

If a new release of Prophet has been issued which requires the code to be regenerated before certain new
features are available.

Highlight the products you wish to regenerate. Select

Click

on the Run section to display the following:

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

Re-scanning of products (Auto-Scan)

Auto-scan allows you to automatically re-scan products without having to select each one individually. It
in the ensuing Input Variables window, and
has the same effect as opening each product, clicking
saving the product. There are two main reasons to use auto-scan:

To bring a new input variable into the products, where the default definition is the required one for each
product.

To remove an input variable from products if it is no longer required.

Select

on the from the Object Ribbon and in the Product section to display the following:

Select products in the same manner as you do for regeneration.

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Lesson 6: Further topics

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

Conclusion
You have now completed the Introduction to Prophet Tutorial, US Library and should be ready to tackle
some real tasks using Prophet.
To learn more about Prophet:

Work through the Model Office Tutorial

This tutorial will introduce you to a number of other features such as:

New business processing

Accumulations

Summary library

Reports

Queries

Prophet Excel Reporting

Grouping of model point data in Prophet

Work through the tutorial in the Data Conversion System and Viewer Users Guide.

Consult the manuals supplied with Prophet.

These manuals are supplied on paper and can also be accessed from within Prophet by selecting User
Manuals on the Support ribbon.

Use Help Topics

Help Topics contains context sensitive information for all the system features of Prophet.

Refer to Global Actuarial Documentation

This gives detailed information on Prophet libraries, indicators, and variables. It can be accessed by selecting the Global Actuarial Documentation icon on the Support ribbon.

Experiment with the system and the calculations you can set up.

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U.S. Library product input files & results

This section contains listings and results printouts for the N___UL product that you produced as you went
through the tutorial using the U.S. Library. These will help you understand and identify any mistakes you
may have made and includes:
Product listing .........................................................................................................................................88
Model point file......................................................................................................................................119
Parameter file........................................................................................................................................121
Global file ..............................................................................................................................................122
Results ..................................................................................................................................................124

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U.S. Library product input files & results

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Product listing

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Product listing

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Product listing

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Product listing

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Product listing

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Product listing

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Product listing

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Product listing 101

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Product listing 103

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Product listing 105

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Product listing 107

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Product listing 109

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Product listing 111

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Product listing 113

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Product listing 115

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Product listing 117

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Model point file 119

Model point file

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Parameter file 121

Parameter file

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Global file

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Global file 123

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Results

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135

INDEX
A
Accumulations............................................................................................................................................................................... 7

F
Future Accumulation Period........................................................................................................................................................ 34

G
Global File ............................................................................................................................................................................... 7, 44

I
Indicator Selection Wizard .......................................................................................................................................................... 11
Individual Output Variables ......................................................................................................................................................... 36

L
Libraries 8

M
Model Point File ...................................................................................................................................................................... 7, 37

P
Parameter Files............................................................................................................................................................................. 8
Past Accumulation Period ........................................................................................................................................................... 34
Product Diagram view ................................................................................................................................................................. 69
Products 7

R
Results Reporting........................................................................................................................................................................ 86
Run Information........................................................................................................................................................................... 50
Run Settings.................................................................................................................................................................................. 7

S
Start Date .................................................................................................................................................................................... 33
Structures...................................................................................................................................................................................... 7

T
Table Properties.......................................................................................................................................................................... 53
Tables 8

U
Unit Prices Files ............................................................................................................................................................................ 8

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136 Index

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V
Variable Properties...................................................................................................................................................................... 75

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