Discounting [33]

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Bullet points include: Annuity reserving Sensitive to longevity risk And assumed long-term yield One common approach is to take credit for assumed yield uplift available from investing in illiquid corporate bonds Since liabilities are also illiquid Decomposition of average corporate bond spreads into different elements (investment grade credit spreads) Source: Kemp (2009) , Webber and Churm (2007), Bank of England (2008) Residual (including compensation for illiquidity) Compensation for uncertainty about default losses Compensation for expected default losses

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