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Foundations of Casualty Actuarial Science
17. Loss cost trends are a central part of the actuarial
ratemaking procedure. Actuaries often have good
knowledge of historical experience, but they must project
past costs into future periods.
18. The pricing of financial products uses present values of
future cash payments.
19. Capital Asset Pricing Model - full form of CAPM.
20. Actuaries generally say that capital is needed as a
function of the risk of the enterprise. This seems
sensible, though it is not axiomatic, and actuaries
have begun quantifying the risk of insurance
operations.
21. Credibility theory has undergone some of its most
innovative advances in the last decade of the 20th
century.
22. Credibility theory was nourished by casualty actuaries,
but it is now finding use in other fields. Particularly
valuable is its use in financial engineering.
23. Recent actuarial literature suggests many emerging
topics, of which we note four that seem especially
promising.
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