The Newsletter of CPS Actuaries and Computer Programming & Systems, Inc.
Volume 3, Issue 1
This issue of CPS Bulletin begins with the conclusion of
our article about assets. The first part appeared in our
April 2002 bulletin. This issue’s article describes some
of the advantages fraternals have with regard to
investing in bonds, and compares the yields on corporate
bonds with treasuries.
Our second article outlines three important areas that all
computer users should be aware of: backup, virus
protection and firewalls.
If you would like our
recommendations as to which software on the market
would be best at handling these items on your
computers, please let us know.
We have also provided an update on recent state and
NAIC activity, including the NAIC’s current position with
regard to the 2001 CSO mortality table. If they take
much longer to adopt the new table, it may have to have
its name changed to the 2003 Table!
We hope that you enjoy receiving this newsletter. If you
have any comments or suggestions on how we can
improve CPS Bulletin, please contact us by visiting our
company web site at www.cpsincorp.com
In Part One of this article (which appeared in our April
2002 issue) we discussed the concept of Investment
Risk and defined it to be the likelihood of failing to meet
one’s liabilities. We showed that for a Fraternal Benefit
Society, the optimum way to determine the liability outgo
is through a cash flow projection and that the nature of
the obligations makes bonds a natural investment
avenue. Furthermore, we discussed methods
minimize the investment risk by matching assets to
liabilities or immunizing surplus against movement in
In this article we shall
look at the selection of
investments, in order to maximize the return on the
An important basic consideration is that fraternals are
tax-exempt organizations as opposed to most other
market participants who are taxed on ei