The market-consistent value of liabilities and the credit crunch
In this article, Towers Perrin principals, Ferdia Byrne and David Dullaway, discuss the liquidity premium and how it is one of the most important areas of concern for insurance firms in these uncertain times
In late December, the European insurance Chief Financial Officers Forum (CFO Forum) announced a review of its Market Consistent Embedded Value Principles(c). While maintaining its commitment to market-consistent valuation, some concern has been voiced about the appropriateness of the approach in the light of turmoil on financial markets. The CFO Forum will undertake a review of specific issues, and has included the effect of the 'liquidity premium' as an area requiring further work. What do we
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