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A method of calculating unearned premiums in short-term insurers. The method calculates UPR of 50% of premiums written for the year. It is based on the assumption that the average date of issue of all policies written during the financial year is the middle of the year. This method is generally used only by reinsurer’s where detailed information on inception dates of risk is not available.

Analysis of economic statistics such as the growth rate of countries, exchange and inflation rates, mineral supplies, imports and exports, current and capital accounts in the balance of payments, etc.





A form of insurance usually written in a life company under which major medical costs are covered e.g. hospitalisation costs for a heart attack.

A shareholder who is part of a group that controls more than half the issued shares of a corporation.





Effort by a claimant to continue to receive disability income benefits by pretending continued illness or injury.

Responsible for the operation of unit trusts.





The investment manager's bias towards particular shares that dominate the returns of the portfolio. Examples of investment styles are portfolios that concentrate on small companies, large companies, Value shares, Growth shares, emerging companies, blue-chip shares etc.

Minimum amount needed to be held "on account" to ensure an option or futures contract will be honoured.





See solvency margin.

A rate of personal tax being the percentage rate that each additional R 1 of taxable income attracts.




Marine insurance covers the risk of loss to ships and vessels: _ marine hull – covers the risk of loss to property and goods in transit; _ marine cargo – marine cargo insurance may be divided into two divisions: – inland marine, which covers property and goods in transit between locations without requiring sea transport, and – ocean marine, which covers property and goods subject to a sea voyage. Marine cargo policies are issued in various forms depending on the requirements of the shipper, the ship owner, the charterer, the consignee, etc. Marine insurance is included under the transportation policy for regulatory reporting purposes.

There are a number of different types of marine liability covers including: _ charterer’s liability – liability incurred under contract by ship lessees for damage to ships and property damage liabilities to third parties; _ comprehensive marine liability – a third party liabilitypolicy for ship chandlers (supplying provisions to ships)container freight station operators, ship breakers, yachtmanufacturers and marine construction contractors; _ contingent container – third party liability contingency insurance coverage for container lessors; _ logistic liability – a broad form liability package for insureds engaged in all phases and types of transportation; _ marine operators liability – third party liability insurance for operators of yacht marinas; _ port authority / harbour board liability – a liability policy for private companies or government authorities responsible for the administration of ports and harbours – can include pilot’s liability; _ ship agents / brokers liability – professional and or third party liability insurance for representatives of shipping lines; _ ship repairers liability – care, custody and control liability to ships being repaired and third party bodily injury and property damage liability; and _ stevedores liability – cover of liability to third parties arising out of loading or unloading ships.




Large cap: The largest 40 JSE All Share stocks by market capitalisation.

Mid cap: Next 60 JSE All Share stocks by market capitalisation.




Small cap: Remaining JSE All Share stocks by market capitalisation.

Cyclical or repetitive market behaviour caused by particular macroeconomic factors and investor behaviour.





The defining characteristic of a market neutral fund is the low correlation (close to zero) between its returns and those of equities and bonds. Adding a market neutral fund investment to a portfolio can generally improve its overall risk/return structure. They are usually designed to exploit short-term market inefficiencies and pricing discrepancies between equities, debt instruments, options, and futures while hedging out as much of the market exposure as possible. This hedging out of market risk usually leads to low liquidity and consequently these funds tend to run smaller pools of capital than funds that make directional bets. They often have high levels of leverage. It is important to realize that these funds are not necessarily riskless since they can never have a zero correlation to the markets for a long period of time.

The last reported price at which a security was traded on an exchange.





A body appointed by government to regulate markets so as to ensure their integrity.

The risk of an investment due to its correlation with the market. A statistical measure of market risk is Beta.




Measures the historical market sensitivity of a share looking at historical betas.

The portion of return attributable to a managers active decision to either hold cash, or hold assets having a higher or lower beta than the benchmark.




The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

The implicit costs arising from participating in the market. For example, by selling large volumes of shares at once, the manager may influence the market price downwards, leading to the value of the share price being eroded.





An investment portfolio in which the value of the investment directly depends on the price of the underlying assets.

A fact that would influence a prudent underwriter in determining the premium for a policy.




The time when payment under an endowment policy becomes due.

Value of an investment life policy at maturity date.




This provides the lowest negative return incurred in a particular time interval (usually a month or quarter) taken over a specified period (usually one or three years).

The worst case possible loss if a catastrophe occurs in respect of risks insured under a particular policy. It can also be applied to concentration of risk and would refer to loss from a catastrophe such as an earthquake




This is the maximum loss under ideal conditions. In other Lords if a fire occurs and the fire protection measures (e.g. sprinklers), work.

See Modern Portfolio Theory




An amount specified by a life underwriter as the amount of cover the company will accept without evidence of health.

Members of a fund can be divided into three groups - active members, deferred members and pensioners. It doesn't include former members or persons whose membership has been terminated in accordance with the rules of the fund.





See "Individual Investment Choice".

This is the sum of members' contributions to their retirement benefits. Refer to fund rules for more information.





A British term for a bank that specializes not in lending out its own funds, but in providing various financial services such as accepting bills arising out of trade, underwriting new issues, and providing advice on acquisitions, mergers, foreign exchange, portfolio management, etc.

A system for measuring the difference of an individual risk from standard in order to reflect the difference in the rate.




The lowest monetary consideration for which a policy will be issued. In some cases this is also the amount retained by the company in case of cancellation by the insured.

A type of short-term insurance or reinsurance policy where the contract provides for benefits relating to the risk contemplated in the contract when these risks are not specifically covered under any of the other types of policies defined under the Short-term Insurance Act. The eight classes of policies defined in the Short-term Insurance Act comprises: _ accident and health; _ engineering; _ guarantee; _ liability; _ miscellaneous; _ motor; _ property; and _ transportation.




Information supplied by the insured to the insurer which is incorrect to a material degree. The supply of such information whether innocently or fraudulently gives the insurer the right to repudiate the contract.

Multilateral motor vehicle fund. This is a state insurer that provides compulsory third party liability insurance for motorists. The premiums are paid via purchases of petrol. Modified preliminary A policy reserve computed to allow for some of the higher term reserve first year expenses on a policy. A lesser portion of the first year’s premium paid by the insured is used for reserve purposes than in subsequent years. There are various methods for arriving at the difference between first-year and renewal premiums.




The assumptions underlying MPT are that: i) investors base their investment decisions purely upon the mean, variance and covariances of the available portfolios over a single time period ii) investors prefer more to less – i.e. non-satiation iii) investors are risk averse – i.e. an incremental decrease in wealth is valued more highly than an incremental increase in wealth iv) individual assets are infinitely divisible and so can be held in any proportion v) taxes and transaction costs can be ignored. This theory allows each investor to establish his personal efficient frontier from which he must choose a portfolio. Also see the Capital Asset Pricing Model (CAPM).

A value given to fixed-income instruments from which the change in the instrument's price can be approximately calculated. The higher the duration value, the greater the change in the instrument's price.





The means by which government tries to influence macroeconomic conditions by increasing or decreasing money supply, primarily through interest-rate policy.

The money market is the market for short-term assets.




Mutual Fund or unit trust that invests in short – term debt obligations of government and companies. These funds pay a market rate of interest that fluctuates from day to day.  

See "Cash Investments".





See defined contribution fund.

The effective, or true, annual rate of return. The Money Weighted Return is the rate actually earned or paid in one year, taking into account the effect of compounding.





See "Cash Portfolio".

The month in which the premium is processed in the (or entry) books of the insurer. This is the starting point for calculating earned and unearned annual premiums.




A feature added to some life insurance policies providing for disability benefit a monthly income during disability in the event the insured has become totally and permanently disabled.

The relative incidence of disability because of disease or physical impairment.




The risk of an insured becoming ill or disabled.

A listing by age of the number of individuals exposed to illness, sickness and disease.




Frequency of death.

Changes made to the mortality tables reflecting changing mortality patterns due to such things as AIDS and medical advances.




The risk of an insured life ending through death of the insured.

A listing, by age, of the probable death rates and certain other derived values, of a homogeneous group of individuals based on actual experience over a period of years. The table shows the assumed number of individuals left alive at each subsequent age from a given age group.




A bond secured by property, especially real estate.

Insurance that decreases in amount periodically (usually yearly). It may either expire completely after a term of years or remain level thereafter at a reduced amount. The decreases in amount follow the principal-reduction pattern of a monthly reducing mortgage loan, and the insurance is primarily intended to pay off the unpaid balance of such a loan in the event of the death of the insured.




Cover in respect of motorised vehicles including fire, theft, impact, collision and third party liability cover.

Morgan Stanley All Country Index (Equities).




Multi-management is an investment strategy in which multiple asset managers from different asset management houses are selected to perform the underlying fund management of an investment portfolio, in order to reduce risk and optimise performance.

The emphasis here is on the investment strategy utilised called the multiple-manager approach. The funds are called multi managed funds. The multiple-manager approach is not purely an administrative system as it is more active in providing the investor with a limited choice of investments to suit the risk profile of the investor. The multiple-manager manager is the manager of a number of independent asset managers who are selected for their skill in a particular investment type. These specialist asset managers, who have to handpick shares, take specific instructions from the multiple-manager manager and are closely monitored to ensure compliance with instructions. This specialist control by a wide range of asset managers is a feature of this type of investment strategy which ultimately reduces the risk of relying on the expertise and skill of one fund manager. However, the multiple-manager manager may not have access to the full selection of asset managers, and this could detract from the attractiveness of this investment approach. The "bundled products" offered by multiple-manager managers are essentially the traditional types such as unit trusts, life assurance endowment policies, retirement annuities and retirement funds.




International terminology for unit trust-type investments.

An insurance company without shareholders. Management is directed by a board elected in most cases by holders of participating policies


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