Calls for consistency over risk-free rate
The risk-free rate of return that provides the starting point for valuing liabilities has proven more difficult to define in practice than in principle. Practitioners hope for consistency from regulators as they revisit the concept. Blake Evans-Pritchard reports
Only a few years ago, it seemed that everyone was talking about the same thing when it came to valuation of life insurance liabilities. The snapshot of a life company’s financial health, taken at any given point in time, should mirror as closely as possible the reality seen in the markets.
While the financial crisis that began in 2008 did not fundamentally alter the ideas that lie behind market-consistent valuations, it caused people to wonder whether the methodology for applying them might need
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