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#11
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If you don't capitalize the commissions, then the companies have day one losses of $100 and $200. So even though the policies issued have ecomonic value, the transaction incurs a loss. How does that make sense? |
#12
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Does anyone know how this is handled in other industries? For example, in the oil industry, can a company differ drilling costs to when the oil is pumped? |
#13
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In Europe, I think that pretty much all insurers report something called Embedded Value, which basically up-fronts everything. So it's the PV of future profits on all their business. EV is still evolving, but if the accountants win the day, that will be the "real" number for analysts to look at. On an EV basis, the current period P&L turns out to be the change in EV, reflecting an addition (one hopes) for new business and a lot of +/- on existing business as actual divereges from expected.
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Carol Marler, "Just My Opinion" Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial. My latest favorite quotes, updated Nov. 20, 2018. Spoiler: |
#14
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It's very much like what Enron was doing. |
#15
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So if the accountants say don't DAC acquisition, you use another approach which front-ends all the profit forever. I hope somebody wakes the accountants up. (I think I said that in my OP.)
__________________
Carol Marler, "Just My Opinion" Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial. My latest favorite quotes, updated Nov. 20, 2018. Spoiler: |
#17
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![]() If I'm not mistaken, GNAIE is objecting to an element of the risk margin, not the treatment of acquisition costs.
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#18
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__________________
Someone tells us that God loves us as a father loves his children. We are reassured. But then something awful happens. Some qualification is made.... We are reassured again. But then perhaps we ask: what is this assurance of God's (appropriately qualified) love worth, what is this apparent guarantee really a guarantee against? Just what would have to happen not merely (morally and wrongly) to tempt but also (logically and rightly) to entitle us to say "God does not love us" or even "God does not exist"? -- Antony Flew |
#20
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when IASB completes its work on Fair Value, Canadian companies will be forced into this new International Standard. Currently, the IASB is still planning to adopt in 2011, which means that the current Canadian method will no longer be used in 2012 and therafter.
__________________
Carol Marler, "Just My Opinion" Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial. My latest favorite quotes, updated Nov. 20, 2018. Spoiler: |
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accounting, economy, fair value, fasb |
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