Cardinal Peak Income

0. Summary!

1. Source map✓

2. Functionality!

Nothing the engine computes for this product departs from the filed forms, and the memorandum's own rider exhibit replays column for column; the amber is the acceptance state alone.

3. Rate & parameter fidelity!

Each value is tested against the evidence class its source can attest: carrier-changeable values against the dated brochure, unbracketed values against the filed form, with the Statement of Variability as a range cross-check only.

4. Balances & cash flows✓

Every monthly balance and cash flow below is re-derived in the binder and tied to the engine — the recalc gate asserts the checks wholesale; this registry is generated from the binder's own check columns.

The cell projects 720 months on a deterministic scenario. The account value exhausts in month 235; from there the rider pays for life, and those claim payments are the largest single liability component (Ex 9 · B9).

Because the index rises steadily and never reaches the cap, the zero floor and the cap constraint are not hit on this path, and the guaranteed surrender value never becomes the binding death benefit: the rules are checked every month, their boundaries are not reached.

One export gap is routed out of this report. In the single month the account value drains, the crediting workbook's rider-charge display column re-derives a charge the engine does not book; both land on a zero account value, so no check column and no cash flow moves.

The column has the same shape for every rider product, so it belongs in review/TODO.md as an export-coverage item, not in this product's decisions.

Assumptions → actuals

The pricing spread is a function of the declared cap, not an independent margin: inverting the option budget at the issue-date market inputs is what reproduces the declared cap at each renewal, and the standing drift validator passes on this run.

Decrement basis

The required-minimum-distribution add-on is inert here. Scheduled withdrawals stop when income begins at attained age 65, eight years before the add-on's age gate, so the leg never reaches a cash flow.

Cost of funds & PV decomposition

§14.2 roll-forward identities: secondary tripwire only (largely tautological); the credit is proven by the Ex 2 re-price and the per-row roll-up check.

5. Inner-loop projection✓

The reserve audit replays the priced computation at eight valuations from issue through the claim phase, on the guaranteed basis, with the election scan opening at the contractual five-year minimum rather than the modeled election.

The hedge loop re-solves at issue and each anniversary, shocking the first-year credited rate by one percent and sizing notional off the resulting liability delta, discounted at the net investment earned rate.

One engine-wide observation is routed out of this report. At a valuation inside a crediting term the guaranteed-basis credit is fixed in dollars and divided by the account value standing at the term boundary, so a falling account value can imply a credited rate above the declared cap — two of 720 valuations here, raising the reserve.

The divisor is not documented, so it belongs in review/TODO.md as a specification gap, not in this product's decisions.

6. Known deviations & conservatism ledger✓

The filed features not yet on an acceptance list are decisions, not deviations: they sit in §2 and in the summary until accepted.

Glossary

• GAWA — guaranteed annual withdrawal amount = withdrawal % × benefit base at election; the lifetime income the rider guarantees. Contract aliases (LPA, LYI, MLIW, MAWA…) are in Product terms.
• NIER — net investment earned rate = asset yield − defaults − investment expense; the best-estimate discount rate for the economic (hedge) loop.
• Cost of funds (CoF) — the rate that makes PV(all liability cash flows) = premium; the engine's headline output.
• MGSV / MGCV — minimum guaranteed surrender value / minimum guaranteed contract value; the statutory nonforfeiture floor on cash surrender. MGSV is the canonical form in these reports (some filings, and the engine's gmsv_* fields, write GMSV).
• SOV (Statement of Variability) — the filing section defining each bracketed schedule value's permitted range or formula; bracketed numbers are specimens, not issued values.
• GMOC — guaranteed minimum option cost; the CARVM guaranteed-basis credit floor (AG33/35 future terms credit max(guarantee, GMOC)). Derived per product from the filed minimum 1-yr cap (guaranteed_minimum_cap) as the Black-Scholes price of the 1-yr ATM-vs-cap call spread on the ruled valuation basis (4.00% continuous RFR, 18.00% ATM vol, 1.00% dividend yield, linear skew −0.25 per unit moneyness); engine default 25bp where no minimum is filed. Distinct from the rider-charge "filed max" — a different guarantee.
• Exhibit (Ex N · cell) — a tab and cell in the recalc-gated Excel binder the actuary can open and trace; the report's default evidence.
• Replay tie-out — the reserve-audit reconciliation model_to_audit_difference ≈ 0; the strongest anchor that the audit reproduces the engine.
• Regression gate — the 1e-10 numerical-reproducibility check over the pinned runs in REGRESSION_RUNS; a product with no pinned run can silently drift.
• Declared Rate Factor — the carrier-declared cap, participation rate or trigger rate for one Index Term.
• Credited Interest Rate — the contract-year credit as a fraction of the strategy values that earned it; the input to the roll-up and the income increase.
• Guaranteed Annual Withdrawal — this rider's scheduled lifetime income; GAWA is its annual amount.
• Rollup Credit — the annual addition to the benefit base, struck after the index credit on the anniversary.

Appendix