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The CRO Forum releases the final version of the paper on calculation of Market Value of
Liabilities. The aim of this paper is to explain in more detail the CRO Forum's
position on the topic of the Market Value of Liabilities (MVL) of insurance
firms.
The paper explains the CRO Forum’s position on the topic of the
Market Value of Liabilities (MVL) of insurance firms, particularly on
how it should be defined and parameterised.
The implications and positions stated in the paper are well supported in that
the position is consistent with the European CFO Forum.
The CRO Forum believes that the requirements of a solvency framework, while
complementary to, may not necessarily be the same as, the needs of financial
accounting frameworks. In particular, the solvency framework should present a
fair reflection of the economic value of liabilities through the MVL and should
not be influenced by considerations relating to the timing and certainty of
profit recognition
This position is consistent with the view adopted by the European CFO Forum
that states that any allowance for accounting considerations should be
explicitly introduced as an additional balance sheet item.
The publication also indicates how the CRO Forum would like to ensure that
the construction of the MVL is consistent with regulators’ views and is also
consistent with sound risk management principles followed by leading
insurers.
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