On Accounting Standards and Fair Valuation of Life Insurance and Pension Liabilities

Scandinavian Actuarial Journal, Vol. 104, No. 5, pp. 372-394, 2004

Posted: 12 Dec 2012

See all articles by Peter Løchte Jørgensen

Peter Løchte Jørgensen

University of Aarhus - Business and Social Sciences

Date Written: December 11, 2012

Abstract

The actuarial profession is increasingly teaming up with financial economists for a fruitful cooperation on the proper valuation of life insurance and pension (L&P) liabilities. This has been a natural consequence of a recent sharply increased focus on market values in financial reports of L&P companies from regulators, standard setters, the financial press, stakeholders, and others with an interest in the L&P business.

This article provides a financial economist’s point of view on recent developments in relation to the fair valuation of L&P liabilities. The role of accounting standards and the background for the international harmonization in this field are first discussed. We then review and explain the concept of fair value and provide a general view on appropriate techniques for estimating fair values of L&P liabilities in accordance with the definition of the concept. The paper also contains a section which briefly reviews recent and quite innovative regulatory initiatives in relation to market value reporting in the Danish market for life and pension insurance.

Keywords: accounting standards, fair value, financial valuation, regulation

Suggested Citation

Jørgensen, Peter Løchte, On Accounting Standards and Fair Valuation of Life Insurance and Pension Liabilities (December 11, 2012). Scandinavian Actuarial Journal, Vol. 104, No. 5, pp. 372-394, 2004, Available at SSRN: https://ssrn.com/abstract=2187775

Peter Løchte Jørgensen (Contact Author)

University of Aarhus - Business and Social Sciences ( email )

Finance Research Group
Fuglesangs Allé 4
DK-8210 Aarhus, 8210
Denmark
+4587165117 (Phone)

HOME PAGE: http://pure.au.dk/portal/en/plj@econ.au.dk

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