Fair valuation of insurance liabilities: Merging actuarial judgement and market-consistency

The requirements of Financial Accounting Standard Board (FASB) 142 provide an excellent opportunity to examine various financial valuation methods used to determine a company’s value. Under FASB 142, goodwill and intangible assets with indefinite useful lives are no longer amortized, but instead tested for impairment at least annually in accordance with the provisions. Any impairment loss has to be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in an organization’s first interim period. The impairment test requires an accurate and fair valuation of the asset in question. This case is based upon the valuation dilemma faced by Integrated Silicon Solution (NASDAQ: ISSI), a publicly traded international technology company, in late 2008. ISSI had made several acquisitions and carried substantial goodwill. Since ISSI was publicly traded, a public market value was available but the financial crisis of 2008 caused the company to consider other methods, as is allowed under FASB 142. The case uses both the income and comparable market approaches to arrive at a fair value, and this value is used to determine if impairment for the goodwill the company carried on its balance sheet existed.

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The importance of operating agricultural equipment in use by fair value from the management situation in small and medium-sized enterprises in the transitional country: Example of the Republic of Serbia

Poljoprivredna tehnika ◽

10.5937/poljteh2101001v ◽

2021 ◽

Vol 46 (1) ◽

pp. 1-6

Author(s):

Jelena Vitomir ◽

Sonja Tomaš-Miskin ◽

Slobodan Popović

Keyword(s):

Real Life ◽

Financial Statements ◽

Fair Value ◽

Transition Countries ◽

Agricultural Producers ◽

Agricultural Equipment ◽

Transitional Country ◽

Real Value ◽

The Republic ◽

Fair Valuation

This study highlights the importance of using real-life values of agricultural equipment in real financial statements in medium-sized enterprises. The authors have adopted the essence of nature related to the estimation of agricultural equipment, that is, he has stated that in the agricultural production of transition countries, agricultural equipment has been used for more than five decades. This was a key assumption adopted by the authors of this study. In addition, the presentation of realistic financial statements should include an account of the real value of agricultural equipment, which essentially leads to a periodic fair valuation of agricultural equipment available to agricultural producers in transition countries.

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Discriminating nutritional quality of foods using the 5-Color nutrition label in the French food market: consistency with nutritional recommendations

Nutrition Journal ◽

10.1186/s12937-015-0090-4 ◽

2015 ◽

Vol 14 (1) ◽

Cited By ~ 26

Author(s):

Chantal Julia ◽

Pauline Ducrot ◽

Sandrine Péneau ◽

Valérie Deschamps ◽

Caroline Méjean ◽

...

Keyword(s):

Nutritional Quality ◽

Nutrition Label ◽

Nutritional Recommendations ◽

Food Market ◽

Market Consistency

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A preliminary framework to estimate and disclose ex-ante cost of capital for (fair) valuation

International Journal of Multivariate Data Analysis ◽

10.1504/ijmda.2016.081089 ◽

2016 ◽

Vol 1 (1) ◽

pp. 61

Author(s):

Josilmar Cordenonssi Cia ◽

Joanília Neide De Sales Cia ◽

Luiz Carlos Jacob Perera

Keyword(s):

Cost Of Capital ◽

Ex Ante ◽

Fair Valuation

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Valuation of Guaranteed Unitized Participating Life Insurance under MEGB2 Distribution

Discrete Dynamics in Nature and Society ◽

10.1155/2019/9439786 ◽

2019 ◽

Vol 2019 ◽

pp. 1-16

Author(s):

Haitao Zheng ◽

Junzhang Hao ◽

Manying Bai ◽

Zhengjun Zhang

Keyword(s):

Life Insurance ◽

Influence Factors ◽

Simulation Method ◽

Insurance Contract ◽

Dependence Structure ◽

Pricing Model ◽

Negligible Probability ◽

Rate Minimum ◽

Single Premium ◽

Fair Valuation

Crisis events have significantly changed the view that extreme events in financial markets have negligible probability. Especially in the life insurance market, the price of guaranteed participating life insurance contract will be affected by a change in asset volatility which leads to the fluctuations in embedded option value. Considering the correlation of different asset prices, MEGB2 (multivariate exponential generalized beta of the second kind) distribution is proposed to price guaranteed participating life insurance contract which can effectively describe the dependence structure of assets under some extreme risks. Assuming the returns of two different assets follow the MEGB2 distribution, a multifactor fair valuation pricing model of insurance contract is split into four components: the basic contract, the annual dividend option, the terminal dividend option, and the surrender option. This paper studies the effect of death rate, minimum guaranteed yield rate, annual dividend ratio, terminal dividend ratio, and surrender on the embedded option values and calculates the single premium of the insurance contract under different influence factors. The Least-Squares Monte Carlo simulation method is used to simulate the pricing model. This article makes a comparison in the sensitivity of the pricing parameters under the MEGB2 distribution and Multivariate Normal distribution asset returns. Finally, an optimal hedging strategy is designed to cover the possible risks of the underlying assets, which can effectively hedge the risks of portfolio.

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