#### Glossary

## Actuarial Model (or Model)

A simplified representation of relationships among real world variables, entities, or events using statistical, financial, economic, mathematical, or scientific concepts and equations. Models are used to help explain a system, to study the effects of different parts of a system, and to derive estimates and guide decisions. A model consists of three components: an information input component, which delivers assumptions, parameters and data to the model; a processing component, which transforms inputs into estimates; and an output component, which translates the estimates into useful business in