Choosing discount rate for the evaluation of insurance liabilities

Audrius Linartas, Ramunas Baravykas

    Research output: Contribution to journalArticle

    Abstract

    The starting EU Solvency II requirements and future accounting standards will require discounting for all of insurance liabilities. A properly chosen discount rate could guarantee the value of insurance liabilities being adequate and market consistent. In small economies this is difficult to achieve due to the unavailability of deep and liquid market for bonds. The authors of the present paper analyze if these market limitations could be bypassed and the discount rate’s term structure could be established. The research is based on the data from the Lithuanian financial market and aims at proposing an innovative approach to discount rate setting which could be used by insurance companies.
    Original languageEnglish
    Pages (from-to)30-40
    JournalIntelektinė ekonomika
    Volume7
    Issue number1
    Publication statusPublished - 2010

    Fingerprint

    Liability insurance
    Discount rate
    Evaluation
    Discounting
    Solvency II
    Guarantee
    Small economies
    Insurance companies
    Financial markets
    Accounting standards
    Term structure

    Keywords

    • Discount rate
    • Insurance liabilities
    • Time value of money

    Cite this

    Choosing discount rate for the evaluation of insurance liabilities. / Linartas, Audrius; Baravykas, Ramunas.

    In: Intelektinė ekonomika, Vol. 7, No. 1, 2010, p. 30-40.

    Research output: Contribution to journalArticle

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