Calculating the liquidity premium
Market dislocation at the end of 2008 prompted calls from many in the insurance industry for the addition of a liquidity premium to the MCEV discount rate. Barrie & Hibbert’s Craig Turnbull and Delme Pritchard examine whether its inclusion is really justifiable
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In December 2008, economies around the globe were recoiling from the collapse of Lehman Brothers and market conditions resembled an insurer’s comprehensive ‘worst case’ stress test. It is difficult to envisage how the timing could have been worse for the group of 20 European insurance companies forming the Chief
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