Accounting and actuarial smoothing of retirement payouts in participating life annuities
- Life insurers use accounting and actuarial techniques to smooth reporting of firm assets and liabilities, seeking to transfer surpluses in good years to cover benefit payouts in bad years. Yet these techniques have been criticized as they make it difficult to assess insurers’ true financial status. We develop stylized and realistically-calibrated models of a participating life annuity, an insurance product that pays retirees guaranteed lifelong benefits along with variable non-guaranteed surplus. Our goal is to illustrate how accounting and actuarial techniques for this type of financial contract shape policyholder wellbeing, along with insurer profitability and stability. Smoothing adds value to both the annuitant and the insurer, so curtailing smoothing could undermine the market for long-term retirement payout products.
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| Author: | Raimond MaurerORCiDGND, Olivia S. MitchellORCiDGND, Ralph RogallaGND, Ivonne SiegelinORCiD |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-772645 |
| DOI: | https://doi.org/10.1016/j.insmatheco.2016.09.007 |
| ISSN: | 0167-6687 |
| Parent Title (English): | Insurance: Mathematics and Economics |
| Publisher: | Elsevier |
| Place of publication: | Amsterdam |
| Document Type: | Article |
| Language: | English |
| Date of Publication (online): | 2016/10/18 |
| Date of first Publication: | 2016/09/22 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2023/10/14 |
| Tag: | Fair market valuation; Historical cost accounting; Life insurance; Retirement; Smoothing; Variable annuity |
| Volume: | 71 |
| Page Number: | 16 |
| First Page: | 268 |
| Last Page: | 283 |
| HeBIS-PPN: | 515062413 |
| Institutes: | Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Creative Commons - CC BY-NC-ND - Namensnennung - Nicht kommerziell - Keine Bearbeitungen 4.0 International |
