5 Discount but no Emergence
- Discount with no emergence
- Pricing to achieve a given profit target
- US Stat/GAAP booking: what a clusterfuck
- IFRS booking: what a joy, separation of insurance service revenue and finance charge, accretion of discount
- IFRS reported discount rates and implied discount in reserves
- Cash flow models: DCF, IRR, NPV; Cummins, Myers-Cohn
- Robbin’s methods
- Single policy co. vs. steady state co. vs growing co.; grow at COC for IRR=steady state
- Maximize growth rate pricing and ergodic model (risk-return consideration)
- Cost of regulatory capital and the adjusted NPV method (account for financing…)
- Calibrating to a rating agency model? (Allocations…)
- Pricing with IRFS free cash flow
5.1 Recap/modernize the Robbin methods
Robbins’s seven methods
- CY II offset (to uw provision)
- PV offset
- CY return on eq/surplus
- PVI/PVE
- PVCF
- RA DCF
- IRR on equity
Issues
- GAAP or Stat or other accounting values
- Discount rates
- Target returns
- Taxes
- Start from an uw provision? Circular.
- Surplus flows
- Treatment of risk
- Reliance on CY values
5.2 Other
- Myers-Cohn DCF
- NCCI IRR
- These are surely equivalent to a Robbins method?