The market-consistent value of liabilities and the credit crunch

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In late December, the European insurance Chief Financial Officers Forum (CFO Forum) announced a review of its Market Consistent Embedded Value Principles(c). While maintaining its commitment to market-consistent valuation, some concern has been voiced about the appropriateness of the approach in the light of turmoil on financial markets. The CFO Forum will undertake a review of specific issues, and has included the effect of the 'liquidity premium' as an area requiring further work. What do