It is a statutory requirement
It is necessary to be able to declare dividends to shareholders
It tells the insurer how well it is managing the business
All of the above
Answer is Right!
Answer is Wrong!
The correct answer is D. All of the above.
A valuation is done by a life insurer for a number of reasons, including:
- To comply with statutory requirements. In many jurisdictions, life insurers are required to have their assets and liabilities valued on a regular basis. This is to ensure that they have sufficient capital to meet their obligations to policyholders.
- To be able to declare dividends to shareholders. Life insurers are required to have a certain level of capital before they can declare dividends. A valuation can help to determine whether the insurer has sufficient capital.
- To tell the insurer how well it is managing the business. A valuation can provide an indication of the insurer’s financial health and its ability to meet its obligations to policyholders.
In addition to these reasons, a valuation may also be done for other purposes, such as:
- To sell or buy a business
- To raise capital
- To set premiums
- To determine the value of an estate