Fees
Overview
ClariNet has the ability to model fees as part of both single case and portfolio valuation. Fee amounts are managed in Pricing and Risk.
They can be specified both at the single case and portfolio level.
A fixed amount of fees for the entire portfolio can be specified. This is useful where the fee amount is independent of the number of outstanding policies in the portfolio.
The fee template can be named as per your preference with no restriction to the number of fee templates created. Fees can be specified as fixed annual amounts per policy and based on a percentage of NDB or NPV.
An example of a fee template:
| Name | Frequency | Interval | Payment Type | Amount | Minimum Annual Amount | Duration |
|---|---|---|---|---|---|---|
| Example fees | Annual | 1 | Fixed | 1000 | 1000 |
| Name | Data type | Description |
|---|---|---|
| Name | A string up to 100 characters. Blank is not allowed. | A user-defined name for this fee (e.g. “Servicing Fees”). |
| Frequency | A dropdown with a list of possible values (note this is not like a regular frequency). | The payment frequency. This can be a simple frequency like Monthly/Annually or can be specified as a one-off at Acquisition or Maturity. |
| Interval | Blank or a positive integer. | The interval between payments. For E.g. a semi-annual payment is specified as Monthly with an interval of 6. |
| Payment Type | A dropdown with a list of possible values. | The values determine how the payment amount is calculated: a fixed amount, a fraction of the specified type (e.g. 0.1% of NDB) |
| Amount | It can be either a fixed dollar amount or a percentage, depending on the Payment Type | This is either a fixed dollar amount if the Payment Type is Fixed, or a percentage of the reference value (e.g. NDB, NPV, or Acquisition Price). In the case of the percentage, it is specified as the annual amount , irrespective of the payment frequency. So if the payment is monthly, specify the monthly amount X 12. |
| Minimum Annual Amount | Blank or a dollar amount. | An annual minimum payment amount. Relevant only if the Payment Type is not Fixed. |
| Duration | Blank or a positive integer. | The number of Frequency units for which this payment is made. e.g. if Frequency is Annual and this value is 10, payment will only continue for 10 years. |
An example showing that interval must not be specified when the frequency is set to Acquisition or Maturity
Use of Fees
Fees can be either referenced inside a Valuation Template:
or they can be referenced explicitly during valuation:
If Fees have been specified, as well as being included in the valuation, the amounts can be downloaded:
