Description: This paper, chapter VI of the 1987 Valuation Actuary Handbook, discusses a framework for the valuation of reserves and surplus in statutory financial statements, first providing a detailed section of definitions to clarify to clarify the terms used in the paper. The “new” environment of volatile interest rates is discussed, and the mathematics underlying ruin probabilities, and combinations of risks. Procedures for different products with different types of risks are discussed. Other topics include coordination of investment policy and product policy, aggregate reserves and surplus needed, use of simplifications, financial planning, and reinsurance.

Description: This is a discussion of the preliminary report of the committee on valuation and related topics. The committee elected to commence its work by examining the fundamental principles of valuation. The traditional issues in the valuation of an insurance enterprise appear within this general framework. The objective of the committee's work is to measure the balance between assets and liabilities in today's volatile economy.