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Approaches to Setting the Discount Rate for Valuation of Insurance Contracts  Form

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firstly the discount curve is a key element of I for us 17 as the calculation of fulfillment cash flows will require insurers to discount their cash flows reflect the time value of money IRS seventeen requires insurers to use a discount curve that is consistent with market prices and also reflects the characteristics of their liabilities in terms of the two requirements the first being the consistency with market prices this will be very familiar to insures particularly in Europe as this is well aligned with reporting under solvency two on the regulatory side but there are still some challenges here around what choice of instruments to use and the availability of appropriate market data on the second requirement to reflect the characteristics of the liabilities this is a bit more of a challenge as is a bit of a move away from the current approach to focus on the asset side now insurers could still use their assets to estimate the liquidity and their liabilities but the assets used shou

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