Technical Note on Profit Sharing and Market-Consistent Embedded Value in German Life Insurance
19 Pages Posted: 22 Jun 2011 Last revised: 2 Jul 2011
Date Written: June 27, 2011
This technical note highlights the functioning of the profit sharing mechanism of life insurance products using the example of classical German life contracts. The profit sharing and guarantee features of these contracts are potentially very costly from a capital requirements perspective, making an understanding of the technical payout profile and reporting properties vital for a proper discussion of the Solvency II impact on product design.
Keywords: life insurance, profit sharing, minimum guarantees, market-consistent embedded value
JEL Classification: G13, G18, G22
Suggested Citation: Suggested Citation