F
Frances
Member
Hi there,
Could someone please explain to me the second paragraph under the "Fund 2 : Value of Free Estate" section, i.e.:
"Under option A, for with profits business the liabilities would be equal to
the total earned asset shares. For without profits business, if the asset shares
do not include the value of without profits business surpluses (i.e. option 2)
then the liabilities should equal a realistic valuation, which could be
determined as the statutory valuation less the realistic present value of future
profits. If the asset shares do include the value of without profits business
surpluses (i.e. option 1) then the liabilities for without profits business
should be the statutory valuation reserves (consistent with those that are
assumed in the calculation of future surpluses arising)."
I don't really understand why the without profits liabilities are being valued realistically under option 2, and why they would be valued on statutory basis under option 1.
Also, paragraphs 3&4 under the 'Valuation rate of interest' of part v).
Thanks,
Fran
Could someone please explain to me the second paragraph under the "Fund 2 : Value of Free Estate" section, i.e.:
"Under option A, for with profits business the liabilities would be equal to
the total earned asset shares. For without profits business, if the asset shares
do not include the value of without profits business surpluses (i.e. option 2)
then the liabilities should equal a realistic valuation, which could be
determined as the statutory valuation less the realistic present value of future
profits. If the asset shares do include the value of without profits business
surpluses (i.e. option 1) then the liabilities for without profits business
should be the statutory valuation reserves (consistent with those that are
assumed in the calculation of future surpluses arising)."
I don't really understand why the without profits liabilities are being valued realistically under option 2, and why they would be valued on statutory basis under option 1.
Also, paragraphs 3&4 under the 'Valuation rate of interest' of part v).
Thanks,
Fran