Blog posts

A bond is a type of financial asset that represents a loan made by an investor to a borrower, typically a company or a government. When an investor buys a bond, they are essentially lending money to the borrower in exchange for regular coupon payments and a promise to repay the initial amount (nominal) at a future date, known as the bond's maturity date.

Bonds come in different types and are typically issued with a fixed coupon rate, which is determined at the time of issuance. The coupon payments are usually made periodically, such as monthly or annually, and the …

In this blog post, we explore the topic of multiple life functions within actuarial science. Up until now, our focus has been on insurance products that revolved around the life of an individual. However, in this exploration, we direct our focus to insurance products that involve multiple insured persons. We'll begin by exploring the various types of such products and then roll up our sleeves to construct a basic model using Python, leveraging the cashflower package.

List of content:

1. Multiple life functions
2. The joint-life status
3. The last-survivor status
4. Modelling example

Multiple life functions

Expanding upon the concept of life insurance …

In this post, we will discuss the output of a cash flow model using the cashflower package in Python. In particular, we will check how to create grouped output, create an output only with a subset of columns and save a custom output.

List of content:

1. Grouping
• Grouped by all
• Grouped by attribute
• Inidvidual output
2. Subset of variables
3. User-defined output
• Default output
• Custom output

Grouping

The output of a cash flow model is a table where rows represent periods and columns represent variables. Data are the values of the variables for the given period.

The structure of the output depends …

Everyone - not only actuaries - becomes very interested in the mechanics of a real estate mortgage once they buy their first home.

In this post, we will discuss how to model a real estate mortgage. We will use Python and the cashflower package.

List of content:

1. Theory
2. Modelling
• Input
• Model
• Results

Theory

A real estate mortgage is a loan from the bank to the customer that must be used to purchase real estate. The amount borrowed is typically quite large and the term is quite long (usually between 15 and 30 years). The payment frequency of real estate …

Insurance companies rely on two main approaches for cash flow modelling: deterministic and stochastic. These models help estimate future liabilities of insurance products, guiding actuaries in predicting the future using historical data and expert judgment.

List of content:

1. Deterministic vs stochastic
2. Modelling example
• Problem
• Deterministic modelling
• Stochastic modelling

Deterministic vs stochastic

Imagine predicting the future: one way is to follow the most likely path, while the other is like exploring various possible paths, akin to the multiverse concept in Spiderman, where multiple worlds have slightly different versions of Peter Parker.

• Deterministic approach

In the deterministic approach, we calculate the …