Overview of the Conversion Process for Traditional Valuation to Point in Time Valuation

OIPA has two methods of calculating the value of a policy:

  • Traditional valuation

  • Point in Time Valuation

Versions of OIPA before V9.0 used Traditional valuation, in which valuation processes all transactions from the inception of a policy to the valuation date. Over time, valuation becomes increasingly resource-intensive using this method. Version 9.0 introduced Point in Time valuation, in which valuation is performed by calculating only from the last valuation date forward. Since Version 9.0, OIPA has supported both methods of valuation. To help clients realize improvements in processing efficiency, OIPA Version 9.5 introduces a process for converting plans from Traditional valuation to Point in Time valuation.

Conversion to Point in Time valuation is a multi-step process to revise the database and configure plans to use Point in Time valuation. This conversion has been designed so that converting existing plans does not require any additional processing steps. The conversion process supports both fixed and variable products. Conversion of unit linked products to Point in Time valuation is not supported at this time. New fund types implemented after the transition to Point in Time valuation will be defined as using either Point in Time or Traditional valuation. Any product using fund types that do not support Point in Time valuation will always use Traditional valuation.

The conversion process is handled via a separate utility. Contact

Point In Time Valuation Database Settings

The PointInTimeValuation column of the AsPlan table governs the logic of conversion to Point in Time valuation. This column can contain three possible values (and null):

  • N (for No)
    The plan uses Traditional valuation at all times. Note that null means exactly the same as No.

  • Y (for Yes)
    This means the plan uses Point in Time valuation only, at all times.

  • T (for Transition)
    The plan is transitioning from Traditional to Point in Time valuation.

The conversion logic depends on the value of PointInTimeValuation as follows:

  • If it is N or null for a plan, then no conversion occurs. The plan always uses Traditional valuation.

  • If it is Y, then it means the plan has used Point in Time valuation since inception, and it always uses Point in Time valuation.

  • If it is T, then the plan will transition policies from Traditional to Point in Time valuation.

Transition Logic:Mixed Valuation Methods

If PointInTimeValuation is set to "T", then the MixedValuation column of the AsPlan table governs the logic used for transitioning policies from Traditional to Point in Time valuation. MixedValuation determines whether both valuation methods are used. There are two possible values:

  • N (or null)
    A value of N(for No) or null for a plan indicates that all activities processed on any of the policies will write Point in Time valuation records. No transition date is required, and if one is set, it is ignored. When valuation activities are processed, existing valuation records can be either Traditional or Point in Time. As the records are read and processed, Point in Time valuation records are written to the database.

  • Y
    When set to Y (for Yes), a transition date must be set for each policy in the plan to be transitioned. The transition date determines how valuation records are written to the database.

    • If the valuation date for the activity is on or before the transition date for the policy, then the activity reads Traditional valuation records, and writes Traditional records to the database.

    • If the valuation date is later than the transition date, and no Point in Time valuation records have been written, then the activity reads Traditional valuation records,and writes Point in Time valuation records.

    • If the valuation date is later than the transition date and Point in Time valuation records have already been written, then the activity reads and writes Point in Time valuation records.

This logic is summarized in the following table.

Conversion to Point In Time Valuation

Fund Types Supported

AsPlan:

PointInTimeValuation

AsPlan:

MixedValuation

AsValuationPolicy:
TransitionDate

Point in Time

Valuation Records

Starting Valuation

Ending Valuation

Fixed,
Variable, or Unit linked

N or (null)

Ignored

Ignored

Point in time valuation records will NOT be read and written.

Traditional

Traditional

Fixed or
Variable

Y

Ignored

Ignored

Point in time valuation records are ALWAYS read and written.

Point in Time

Point in Time

Fixed or
Variable

T

Y

Valuation date
ON or BEFORE Transition date

Point in time valuation records are NOT YET read and written.

Traditional

Traditional

Fixed or
Variable

T

Y

Valuation date
AFTER
Transition date

Point in time valuation records have NOT YET been written.

Traditional

Point in Time

Fixed or
Variable

T

N or (null)

Ignored

Point in time valuation records have NOT YET been written.

Traditional

Point in Time

Fixed or
Variable

T

N or (null)

Ignored

Point in time records have PREVIOUSLY been written.

Point in Time

Point in Time

Fixed or
Variable

T

Y

Valuation date
AFTER
Transition date

Point in time records have PREVIOUSLY been written.

Point in Time

Point in Time

Business Case Examples

In the first example, PointInTimeValuation is set to "T", and MixedValuation is set to "N". No transition date is needed.

  1. Activity 1 is active on the policy. Its effective date is 7/1/2011. This activity is processed before the PointInTimeValuation indicator is set to "T", using Traditional valuation.
    • The activity reads Traditional valuation records from the database.
    • The activity writes Traditional valuation records to the database.
  2. Activity 2 is the first activity added to the policy after the transition to Point in Time valuation. Its effective date is 6/30/2011. This will cause Activity 1 to return to Pending status.
    • The activity reads Traditional valuation records from the database.
    • The activity writes Point in Time valuation records to the database.
  3. Activity 1 is reprocessed, with an effective date of 7/1/2011.
    • The activity reads Point in Time valuation records from the database.
    • The activity writes Point in Time valuation records to the database.

In the second example, PointIinTimeValuation is set to "T", and MixedValuation is set to "Y". The transition date is 7/1/2011.

  1. Activity 1 is active on the policy. Its effective date is 7/1/2011. This activity is processed before the PointInTimeValuation indicator is set to "T", using Traditional valuation.

    • The activity reads Traditional valuation records from the database.
    • The activity writes Traditional valuation records to the database.

  2. Activity 2 is the first activity added to the policy after the transition to Point in Time valuation. Its effective date is 6/30/2011. This will cause Activity 1 to return to Pending status.

    • The activity reads Traditional valuation records from the database.
    • The activity writes Traditional valuation records to the database.

  3. Activity 1 is reprocessed, with an effective date of 7/1/2011.

    • The activity reads Traditional valuation records from the database.
    • The activity writes Traditional valuation records to the database.