Description: This material, Appendix II of the 1987 Valuation Actuary Handbook, is an appendix to Chapter II of the Handbook, ‘Methods of Analyzing cash Flows to Test for Reserve Adequacy.’ In this appendix, the authors provide more detail on what they call cash-flow based surplus, and how this concept can be used. It is defined as the amount of cash that could be removed and leave assets sufficient to mature all benefits on a true economic basis, i.e. ignoring statutory accounting requirements, under an assumed interest rate and experience scenario.

Description: Panel discussion focused on the Effective Use of Capital. Topics included: 1. Definition of capital 2. Appropriate level of capital and surplus in a life insurance company 3. Alternatives for deploying capital 4. Returns a life company should demand on invested capital 5. How much a company should charge for lending its capital in reinsurance transactions