Good News for Life Insurers

January 19, 2010 by · Leave a Comment
Filed under: Bond Regulation 

The insurance industry regulators have prevailed. The rule change is in effect and billions in capital has not been squandered. This common sense approach to capital measurements takes into account the economic value of a bond and its cost basis.

When determining the value of anything, isn’t what you paid for it important?

For example: If I paid $70 for a $100 face value bond, and I received $90 at maturity, is that good or bad? One correct answer is “it depends on what you were expecting….”

But the FACT that you received $20 more than you paid for it should count for something.

[$$] For Insurers, a $5 Billion BenefitWall Street Journal, January 15, 2010

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