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The matching adjustment is a mechanism prescribed in the Solvency II Directive that allows insurance firms 'to adjust the relevant risk-free interest rate term structure for the calculation of a best estimate of a portfolio of eligible insurance obligations'.
The term replacement cost or replacement value refers to the amount that an entity would have to pay to replace an asset at the present time, according to its current worth. [1] In the insurance industry, "replacement cost" or "replacement cost value" is one of several methods of determining the value of an insured item. Replacement cost is the ...
Developing a value proposition is based on a review and analysis of the benefits, costs, and value that an organization can deliver to its customers, prospective customers, and other constituent groups within and outside the organization. It is also a positioning of value, where Value = Benefits − Cost (cost includes economic risk). [4]
This matching may be assessed in the lung as a whole, or in individual or in sub-groups of gas-exchanging units in the lung. On the other side Ventilation-perfusion mismatch is the term used when the ventilation and the perfusion of a gas exchanging unit are not matched. The actual values in the lung vary depending on the position within the lung.
Another immunization method is duration matching. Here, a portfolio manager creates a bond portfolio with a duration equal to the duration of the liabilities. [ 11 ] To make the match actually profitable under changing interest rates, the assets and liabilities are arranged so that the total convexity of the assets exceed the convexity of the ...
Parametric insurance (also called index-based insurance) is a non-traditional insurance product that offers pre-specified payouts based upon a trigger event. [1] Trigger events depend on the nature of the parametric policy and can include environmental triggers such as wind speed and rainfall measurements, business-related triggers such as foot traffic, [2] and more.
Collateral Protection Insurance, or CPI, insures property held as collateral for loans made by lending institutions. CPI, also known as force-placed insurance and lender placed insurance, [1] may be classified as single-interest insurance if it protects the interest of the lender, a single party, or as dual-interest insurance coverage if it protects the interest of both the lender and the ...
Cash flow matching is a process of hedging in which a company or other entity matches its cash outflows (i.e., financial obligations) with its cash inflows over a given time horizon. [1] It is a subset of immunization strategies in finance. [2] Cash flow matching is of particular importance to defined benefit pension plans. [3]