Description: SFAS 157, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value and expands disclosures. This article briefly summarizes SFAS 157 and then turns to the computation of a fair value liability and the use of risk margins, with some expanded discussion of the cost of capital method for establishing the risk margin.

Description: Activity surrounding the principle-based approach to statutory reserves and minimum regulatory capital is gaining momentum. This article will allow those readers who are not as close to this initiative to quickly become familiar with the landscape of the movement and where it stands today.

Description: This article from The Actuary Magazine discusses the paper issued by the Emerging Issues Advisory Group on fair value liabilities. A change in the method used for financial reporting is on the way. The questions, what are the changes and what they mean to you are answered here.

Description: The author notes that “current market value is highly relevant, but its accuracy is limited. Historical accounting, on the other hand, is highly accurate, but is of little relevance.” The article then goes on to discuss two leading methods for performing fair valuation of liabilities: the actuarial appraisal method and the option pricing method, and how they can be reconciled.

Description: This paper attempts to advance practice and methodology with respect to life insurance company valuation. From Society of Actuaries Financial Reporting Monograph, M-AS99-1.

Description: Presented at May 2002 Spring Meeting. This session covers the current status of FAS 133 and extensions such as the proposed statement of position on accounting and reporting by insurance enterprises for certain nontraditional, long-duration contracts and for separate accounts.

Description: This article discusses fair value reporting for insurance companies and how to get fair value in the real world.

Description: Article discussing recent developments in financial reporting research by the Section: 3 new PBA projects, stochastic pricing of embedded options, and comparison of results under IFRS and GAAP.

Description: 2003 Valuation Actuary Symposium, San Diego, CA. Panelists in this session discussed embedded-value and fair-value practices, similarities and differences between EV and fair value, and whether embedded value and fair value are evolving into a single, principles-based measure of value.

Description: Insurance company financial reporting and performance measurement are going through a significant transformation. Insurers are beginning to look at their business based on what many refer to as the “economic value framework.” Under this framework insurance companies determine the economic value of the capital invested in their business and the economic value of earnings to derive a risk-adjusted return on capital. Standard setters, primarily European insurance regulators through Solvency II and the International Accounting Standards Board through IFRS Phase II, propose adopting many of these concepts for solvency and performance reporting.