Hi, When liabilities are transferred between insurers, do we always consider technical provisions of selling insurance company or the EV? How does it work in reality usually? Keen to know. Thank you
In practice it would involve a negotiation between the two parties, with each using either EV or TP (assuming under Solvency II) as the starting point for their own calculations. An EV-based approach would be more likely to be used by a seller if, for example, there were a significant VIF that wouldn't be recognised in the BEL, eg due to material profits arising beyond contract boundaries.
