Description: The author proposes the concept of a risk-free equivalent rate of return on shareholders' equity, or ‘REROSHE,’ as a means of helping business managers make decisions involving risk. The author defines REROSHE as ‘that certain return on an investment of u that will generate the same expected value of utility as will earnings on a line of business supported by surplus u.’ Includes discussion and author’s review of discussion. From Transactions of Society of Actuaries 1983 Volume 35.

Description: In this paper the author develops techniques for measuring GAAP return on total capital by line of business, where total capital includes “benchmark surplus,” the amount of statutory surplus set aside, in addition to reserves, to support in-force business. The author also shows how GAAP returns relate to the internal rate of return the actuary may have calculated to describe expected profitability on a statutory basis. Includes discussion and author’s review of discussion. From Transactions of Society of Actuaries 1982 Volume 34.