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ERM Frameworks and Responses to risk [58]

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Bullet points include: Expected cost to honour existing insurance contracts (plus 1 year new business) Cash flows that can be hedged in deep, liquid and transparent markets are valued in line with cost of hedge For remainder, TP use best estimate plus a ‘risk margin’ (PV of assumed cost of funding the SCR needed to support product) Profits on profitable contracts can offset losses on unprofitable ones But a mass lapse stress in SCR

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