Setting discount rates is a crucial and subjective exercise. This is true for life insurance embedded values too. Many researchers are comfortable with a range for Equity Risk Premiums of between 3% and 5%. Many corporate finance practitioners use a range from 5% to 8% or even higher. My nearly eight year old blog post […]
Category archives: valuation
The future is not as old as we thought
Expectations of future UK life expectancy have declined for several years now. This is not to say that current life expectancy has decreased, but rather than estimates of future mortality improvements are being lowered, pushing down future estimated life expectancy. One report indicates this change may roll back a year of expected mortality improvements. So […]
SAM Risk-free Rate Workshop
The Technical Provisions Task Group and KPMG ran a workshop for industry participation on risk-free rates recently. The idea was to see whether we could improve the extent and quality of industry comment on key, controversial areas of the proposed SAM regime. Turnout was good, but not great, but the discussion and points raised were […]
IASB re-exposing IFRS 4 Phase 2
So, as I expected given the fundamental changes to IFRS 4 in recent months, the IASB is doing the grown-up thing and is re-exposing the latest version of the insurance accounting standard later this year early next year. They are restricting questions to areas that have changed or where final decisions haven’t been made, which […]
Greek default?
So European politicians have more or less agreed a deal which may, more or less, push some of their problems to one side for a period. Yes, I’m not madly optimistic about this as a cure-all. This is not the end of the Euro problems. Part of the deal is a “50% loss for private […]
How to measure the biggest company
While Apple’s market cap rose above Exxon-Mobil’s recently, that is only one measure of company size. ArsTechnica has an interesting analysis of a few different metrics of company size, showing the results of each of these measures.