In pursuit of the unhedgeable
The CFO Forum standard for MCEV is set to be implemented by all major European insurers in 2009 - but doubts persist over how market-consistent it really is. Aaron Woolner reports
How much is an insurance company worth is a simple enough question to ask, but the mental gymnastics required to answer how you value a stream of cashflows that may stretch as far as 40 years into the future is far more complex.
Once you add in the need to apply a market price to assets that don't have a deep and liquid market, you are entering into areas of mental contortion that would seem familiar to the medieval philosophers who argued over how many angels could dance on the head of a pin.
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