The determination of life office appraisal values

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Abstract
The aim of this paper is to examine and document a scientific approach to establishing an estimate of the economic value or range of possible economic values of a life assurance enterprise.This is essentially a practical paper which provides a ‘practitioner's guide’ to performing an actuarial appraisal of a life assurance company rather than providing a rigorous theoretical derivation of the methods. There is, however, a philosophical issue, that of an appropriate risk rate of return, which cannot be completely side-stepped in a paper on appraisal values. This issue is briefly covered in Section 3. It should be noted, however, that an entire paper could be devoted to this subject.The paper finishes on a potentially controversial note, that of UK Generally Accepted Accounting Principles (UK GAAP) for life assurance companies, suggesting that the appraisal value techniques outlined in this paper could play a major part in formulating UK GAAP.

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