Embed Size (px)
Citation preview
1
2003 Casualty Loss Reserve Seminar
2003 Casualty Loss Reserve Seminar
Claudette Cantin
2003 CLRS – September 9, 2003, Chicago, IL
Premium Liabilities – U.S. and Canadian Perspectives
Canadian Perspective
k p mg
2
OverviewOverview
1. Canadian Requirements
2. OSFI Requirements
3. CIA Standards
4. Actuarial Approach
5. Components of premium liabilities
6. Other issues
1. Canadian Requirements
2. OSFI Requirements
3. CIA Standards
4. Actuarial Approach
5. Components of premium liabilities
6. Other issues
3
Canadian Requirementsfor Appointed Actuary
Canadian Requirementsfor Appointed Actuary
Role of Appointed Actuary in Canadian InsuranceCompanies Act since 1985
Value annually the policy liabilities of the company or other matters required by law
Monitor financial condition Report to the board annually on financial position and future financial condition of the company (DCAT) Report to the board of directors on any transactions that may jeopardize the financial condition of the company
Role of Appointed Actuary in Canadian InsuranceCompanies Act since 1985
Value annually the policy liabilities of the company or other matters required by law
Monitor financial condition Report to the board annually on financial position and future financial condition of the company (DCAT) Report to the board of directors on any transactions that may jeopardize the financial condition of the company
4
Premium Liabilities / OSFIPremium Liabilities / OSFI
Policy liabilities in connection with unearned premiums (Gross and Net)
Unearned premiums (Gross and Net) (UPR) Premium deficiency Other net liabilities Deferred policy acquisition expenses (DPAC) Maximum policy acquisition expenses deferrable Unearned Commissions
Policy liabilities in connection with unearned premiums (Gross and Net)
Unearned premiums (Gross and Net) (UPR) Premium deficiency Other net liabilities Deferred policy acquisition expenses (DPAC) Maximum policy acquisition expenses deferrable Unearned Commissions
5
OSFI memorandumOSFI memorandumThe commentary section of the report on the policy
reserves must contained details concerning these items:
(a) the derivation of the gross and net unearned premium liabilities
(b) on the basis of the gross and net business separately, the derivation of the provision for:
- all ultimate claims and other obligations expected to arise after the date of the return under the policies in force at the date of the statement return;
- all adjustment expenses (including unallocated loss adjustment expenses) expected to be associated with the ultimate claims and other obligations;
- all expenses relating to the servicing of the policies in force; and
- all reinsurance costs
The commentary section of the report on the policy reserves must contained details concerning these items:
(a) the derivation of the gross and net unearned premium liabilities
(b) on the basis of the gross and net business separately, the derivation of the provision for:
- all ultimate claims and other obligations expected to arise after the date of the return under the policies in force at the date of the statement return;
- all adjustment expenses (including unallocated loss adjustment expenses) expected to be associated with the ultimate claims and other obligations;
- all expenses relating to the servicing of the policies in force; and
- all reinsurance costs
6
OSFI memorandumOSFI memorandum
(c) the existence of any premium deficiency on a net basis
(d) the maximum deferrable policy acquisition expenses. This item is the difference between the net unearned premiums and the net policy liabilities in connection with unearned premiums, plus the unearned commissions;
(e) the other net liabilities:
- an adjustment for excess of loss treaties where the premium rate varies with the claims experience;
- an adjustment for proportional treaties where the ceding commission varies with the claims experience;
(c) the existence of any premium deficiency on a net basis
(d) the maximum deferrable policy acquisition expenses. This item is the difference between the net unearned premiums and the net policy liabilities in connection with unearned premiums, plus the unearned commissions;
(e) the other net liabilities:
- an adjustment for excess of loss treaties where the premium rate varies with the claims experience;
- an adjustment for proportional treaties where the ceding commission varies with the claims experience;
7
OSFI memorandumOSFI memorandum
(e) the other net liabilities:
- an adjustment relating to an inflation clause;
- an adjustment relating to an automatic reinstatement premium; and
- any expected increase in profit commissions to agents;
(f) the derivation of the gross deferred policy acquisition expenses and the unearned commissions.
(e) the other net liabilities:
- an adjustment relating to an inflation clause;
- an adjustment relating to an automatic reinstatement premium; and
- any expected increase in profit commissions to agents;
(f) the derivation of the gross deferred policy acquisition expenses and the unearned commissions.
8
CIA Standards of PracticeCIA Standards of Practice
CONSOLIDATED STANDARDS OF PRACTICE –PRACTICE-SPECIFIC STANDARDS FOR INSURERS (Section 2000) apply to the valuation of the policy liabilities for an actuary’s report in an insurer’s published financial statements if those statements are in accordance with generally accepted accounting principles.
Policy liabilities include premium and claims liabilities
Canadian statutory reporting is GAAP basis
CONSOLIDATED STANDARDS OF PRACTICE –PRACTICE-SPECIFIC STANDARDS FOR INSURERS (Section 2000) apply to the valuation of the policy liabilities for an actuary’s report in an insurer’s published financial statements if those statements are in accordance with generally accepted accounting principles.
Policy liabilities include premium and claims liabilities
Canadian statutory reporting is GAAP basis
9
Premium Liabilities / CIA DefinitionPremium Liabilities / CIA Definition Section 2230.01 of the CIA standards of practice
defines premium liabilities as follows:
The amount of the premium liabilities (after deducting any deferred policy acquisition expense asset) should be equal to the present value, at the balance sheet date, of cash flow on account of premium development and of claims and expenses to be incurred after that date on account of the policies in force at that date or an earlier date.
Premium development includes additional premiums such as reinstatement premiums and provisions for swing-rated policies.
Section 2230.01 of the CIA standards of practice defines premium liabilities as follows:
The amount of the premium liabilities (after deducting any deferred policy acquisition expense asset) should be equal to the present value, at the balance sheet date, of cash flow on account of premium development and of claims and expenses to be incurred after that date on account of the policies in force at that date or an earlier date.
Premium development includes additional premiums such as reinstatement premiums and provisions for swing-rated policies.
10
Relevant PoliciesRelevant Policies Section 2130.18 .19 .20 of the CIA standards of practice
defines relevant policies as follows:
.18 The relevant policies for the valuation are those which are in force at the balance sheet date, including those whose issue is then committed,
or which were in force earlier and which will generate cash flow after the balance sheet date. There are no policy liabilities in respect of other policies expected to be issued after that date, whether or not they are expected to be profitable.
.19 There usually are both premium liabilities and claim liabilities in respect of policies which are in force at the balance sheet date.
.20 ……There may be premium liabilities in respect of those policies ( not in force) as a result of the right of policyholders to reinstate them, or
of their unpaid retrospective premium, commission, and similar adjustments, experience rating refunds, reinsurance ceded, and subrogation and salvage.
Section 2130.18 .19 .20 of the CIA standards of practice defines relevant policies as follows:
.18 The relevant policies for the valuation are those which are in force at the balance sheet date, including those whose issue is then committed,
or which were in force earlier and which will generate cash flow after the balance sheet date. There are no policy liabilities in respect of other policies expected to be issued after that date, whether or not they are expected to be profitable.
.19 There usually are both premium liabilities and claim liabilities in respect of policies which are in force at the balance sheet date.
.20 ……There may be premium liabilities in respect of those policies ( not in force) as a result of the right of policyholders to reinstate them, or
of their unpaid retrospective premium, commission, and similar adjustments, experience rating refunds, reinsurance ceded, and subrogation and salvage.
11
Term of LiabilitiesTerm of Liabilities Section 2130.21 of the CIA standards of
practice defines term of liabilities as follows: The term of the liabilities of a property and casualty insurance policy ends at its expiry, which usually is
within one year of the balance sheet date, unless for example
the policy has been cancelled, in which case that term ends
at the effective date of cancellation,
or the contractual term of the policy exceeds one year; for example, an extended warranty policy
which provides coverage for several years after expiry of the basic warranty.
Section 2130.21 of the CIA standards of practice defines term of liabilities as follows:
The term of the liabilities of a property and casualty insurance policy ends at its expiry, which usually is
within one year of the balance sheet date, unless for example
the policy has been cancelled, in which case that term ends
at the effective date of cancellation,
or the contractual term of the policy exceeds one year; for example, an extended warranty policy
which provides coverage for several years after expiry of the basic warranty.
12
Actuarial ApproachActuarial Approach Process starts with UPR
Determine the policy liabilities (claims and expenses) in connection with the UPR– gross and net basis
Determine the equity in unearned premium i.e. the difference between the UPR and the premium liabilities
Test premium deficiency and the maximum allowable DPAC
Determine/test other liabilities
Documented in Study Note on the Actuarial Evaluation of Premium Liabilities by C. Cantin and P. Trahan
Process starts with UPR
Determine the policy liabilities (claims and expenses) in connection with the UPR– gross and net basis
Determine the equity in unearned premium i.e. the difference between the UPR and the premium liabilities
Test premium deficiency and the maximum allowable DPAC
Determine/test other liabilities
Documented in Study Note on the Actuarial Evaluation of Premium Liabilities by C. Cantin and P. Trahan
13
Unearned PremiumUnearned Premium
Actuaries need to comment on the determination of UPR by company
Most lines of business, pro-rata over term of the liabilities usually one-year
Most involved when the contractual term exceeds one-year such as warranty business, RVI, mortgage
- UPR proportional to the duration of the protection provided and related to the expected payout
- Issue is obtaining information on these contracts
- Sometimes earned over one-year and liabilities reported as claims liabilities
Other exceptions – excess-of-loss, special programs
Actuaries need to comment on the determination of UPR by company
Most lines of business, pro-rata over term of the liabilities usually one-year
Most involved when the contractual term exceeds one-year such as warranty business, RVI, mortgage
- UPR proportional to the duration of the protection provided and related to the expected payout
- Issue is obtaining information on these contracts
- Sometimes earned over one-year and liabilities reported as claims liabilities
Other exceptions – excess-of-loss, special programs
14
Policy Liabilities in connection
with UPR
Policy Liabilities in connection
with UPRActuarial valuation includes: Future claims and adjustment expenses on inforce policies
(expected loss ratio) – based on most recent accident-years adjusted for trend, rate changes, seasonality
Unallocated claims adjustment expenses – same % of claims liabilities
Costs of servicing inforce policies (maintenance costs) – commonly approximated as 1/3 of general admin expenses
Reinsurance Costs Investment income to be fully recognized for 2003
Actuarial valuation includes: Future claims and adjustment expenses on inforce policies
(expected loss ratio) – based on most recent accident-years adjusted for trend, rate changes, seasonality
Unallocated claims adjustment expenses – same % of claims liabilities
Costs of servicing inforce policies (maintenance costs) – commonly approximated as 1/3 of general admin expenses
Reinsurance Costs Investment income to be fully recognized for 2003
15
Overall CalculationOverall Calculation
Dubois Fire & Casualty Insurance Company Dubois Fire & Casualty Insurance CompanyEquity in Net Unearned Premium Reserve as of December 31, 1997 ($000) Discounted Loss Ratios on Unearned Premium as of December 31, 1997
A. Claims and External Adjustment Expense DataNet Selected Discounted
Unearned Estimated Ultimate Loss Ratio Undiscounted Discount LossLine of Business Premium 1995 1996 1997 Loss Ratio Factor RatioAuto - Third Party Liability 1,500 0.656 0.681 0.740 0.725 0.960 0.696Auto - Accident Benefits 2,100 0.958 0.944 0.870 0.900 0.858 0.772Auto - Physical Damage 2,700 0.620 0.636 0.650 0.650 1.039 0.676Auto - Total 6,300 0.741 0.749 0.745 0.751 0.949 0.713Personal Property 600 0.667 0.641 0.594 0.600 1.060 0.636Liability 300 0.886 0.860 0.978 0.950 0.985 0.936(1) Total - Voluntary Business 7,200 0.741 0.745 0.742 0.747 0.958 0.716(1a) Facility 350 0.926 1.000 0.926(1b) Assumed from KIC 4,250 0.725 0.931 0.675
B. Actual Data Other Than Claims1995 1996 1997 Selected
(2) Earned Premiums - Voluntary Business 19,487 22,543 24,546(3) Maintenance Exp. [1/3 of Gen. Exp.] 521 540 580(4) Maintenance Expense Ratio [(3) / (2)] 2.7% 2.4% 2.4% 2.5%(5) Selected Internal Adjustment Expense Ratio 3.5%(6) Contingent Commission Ratio 0.2%
16
Overall CalculationOverall Calculation
Dubois Fire & Casualty Insurance CompanyEquity in Net Unearned Premium Reserve as of December 31, 1997 ($000)
C. Equity in Unearned Premium ReserveUndiscounted Discounted
(7) Unearned Premiums - Voluntary Business [(1)] 7,200 7,200(7a) Unearned Premiums - Facility Association [(1a)] 350 350(7b) Unearned Premiums - Assumed from KIC [(1b)] 4,250 4,250(8) Expected Claims & ALAE - Voluntary Business [(7) x (1) disc.] 5,378 5,152(8a) Expected Claims & ALAE - Facility Assocation [(7a) x (1a)] 324 324(8b) Expected Claims & ALAE - Assumed from KIC [(7b) x (1b)] 3,081 2,869(9) Maintenance Expenses 286 280(10) Internal Adjustment Expenses [(5) x (8)] + [ 2.7% x (8b)] 271 258(11) Contingent Commissions [(6) x (7)] 14 14(12) Cost of Excess-of-Loss 4 4(13) Equity in Unearned Premium Reserve 2,441 2,900(14) Actual Deferred Policy Acquisition Expenses 1,510 1,510(15) Statutory Premium Deficiency 0 N/A
17
Deferred Policy Acquisition Expenses
Deferred Policy Acquisition Expenses
Asset to amortize prepaid expenses over the policy period (GAAP Accounting)
GAAP imposes some constraints on deferability of expenses DPAC is limited to 30% of UPR (statutory basis) Gross DPAC equals premium tax and commissions plus other
prepaid expenses Net DPAC equals gross DPAC less unearned commissions Actuaries to comment on derivation of the DPAC and unearned
commissions in report to regulator
Asset to amortize prepaid expenses over the policy period (GAAP Accounting)
GAAP imposes some constraints on deferability of expenses DPAC is limited to 30% of UPR (statutory basis) Gross DPAC equals premium tax and commissions plus other
prepaid expenses Net DPAC equals gross DPAC less unearned commissions Actuaries to comment on derivation of the DPAC and unearned
commissions in report to regulator
18
Deferred Policy Acquisition Expenses
Deferred Policy Acquisition Expenses
Actuarial Involvement- Is the equity in Unearned Premium sufficient to cover the
DPAC? DPAC recoverable for future expected profits?
- Calculate maximum deferrable expenses - difference between the net unearned premiums and the net policy liabilities in connection with unearned premiums, plus the unearned commissions
- May become the figure recorded by management
Line Groupings ???
Actuarial Involvement- Is the equity in Unearned Premium sufficient to cover the
DPAC? DPAC recoverable for future expected profits?
- Calculate maximum deferrable expenses - difference between the net unearned premiums and the net policy liabilities in connection with unearned premiums, plus the unearned commissions
- May become the figure recorded by management
Line Groupings ???
19
Premium DeficiencyPremium Deficiency Premium deficiency exists when the equity in UPR is negative
When UPR is less than the policy liabilities related to the unearned premium
If equity < 0 i.e. premium deficiency exists DPAC is reduced by the amount of deficiency
If deficiency > DPAC, a premium deficiency provision must be booked and DPAC = 0
Line Groupings ????
Premium deficiency exists when the equity in UPR is negative
When UPR is less than the policy liabilities related to the unearned premium
If equity < 0 i.e. premium deficiency exists DPAC is reduced by the amount of deficiency
If deficiency > DPAC, a premium deficiency provision must be booked and DPAC = 0
Line Groupings ????
20
Line GroupingsLine Groupings Actuarial Evaluation
Equity is calculated on an “all lines combined” basis
Deficiencies offset redundancies in premiums
GAAP basis (AcG-3)
DPAC should be determined by reasonable groupings of business, consistent with an insurer’s manner of acquiring, servicing and measuring profitability of its business. ……Total aggregation might be considered unless particular lines are sold and administered in an entirely different fashion one from the other.
Premium deficiency should be determined by reasonable groupings of business
Actuarial Evaluation
Equity is calculated on an “all lines combined” basis
Deficiencies offset redundancies in premiums
GAAP basis (AcG-3)
DPAC should be determined by reasonable groupings of business, consistent with an insurer’s manner of acquiring, servicing and measuring profitability of its business. ……Total aggregation might be considered unless particular lines are sold and administered in an entirely different fashion one from the other.
Premium deficiency should be determined by reasonable groupings of business
21
Line GroupingsLine Groupings
Warranty business and other such long duration contracts are at times treated separately and, premium deficiency recorded if needed
Reinsurance Assumed as opposed to direct writing Treaty vs. Facultative Quota share vs. proportional
Warranty business and other such long duration contracts are at times treated separately and, premium deficiency recorded if needed
Reinsurance Assumed as opposed to direct writing Treaty vs. Facultative Quota share vs. proportional
22
Other LiabilitiesOther Liabilities
Earned but not recorded premiums (EBNR) Audit premiums Provision for contingent commission Swing-rated policies Reinstatement premiums Retro-rated policies
Not charged against the inforce policies when calculating the equity in unearned premiums, but part of total premium liabilities
Actuarial involvement depends on the materiality Often limited to assess reasonableness of management determination
Earned but not recorded premiums (EBNR) Audit premiums Provision for contingent commission Swing-rated policies Reinstatement premiums Retro-rated policies
Not charged against the inforce policies when calculating the equity in unearned premiums, but part of total premium liabilities
Actuarial involvement depends on the materiality Often limited to assess reasonableness of management determination
23
Other IssuesOther Issues
Reservation on Reporting Investment income Subsequent events IASC
Reservation on Reporting Investment income Subsequent events IASC
24
Reservation in ReportingReservation in Reporting
Section 2140, Reservation on Reporting, of the Consolidated Standards of Practice – Practice Specific Standards for Insurers Liabilities Specifically, section 2140.28 states that
If the financial statements of an insurer report policy liabilities, which are greater than, those calculated by the actuary, and if the notes to those financial statements do not provide sufficient disclosure of the rationale for the greater liabilities, then the actuary would report as follows:
I have valued the policy liabilities of [the Company] for its [consolidated] balance sheet at [31 December XXXX] and their change in the statement of income for the year then ended in accordance with accepted actuarial practice, ………….
In my valuation, the amount of policy liabilities is $[X]. The corresponding amount in the [consolidated] financial statements is $[Y].
In my opinion, the amount of policy liabilities of $[X] makes appropriate provision for all policyholder obligations and, except as described in the preceding paragraph, the consolidated financial statements fairly present the result of the valuation.
Section 2140, Reservation on Reporting, of the Consolidated Standards of Practice – Practice Specific Standards for Insurers Liabilities Specifically, section 2140.28 states that
If the financial statements of an insurer report policy liabilities, which are greater than, those calculated by the actuary, and if the notes to those financial statements do not provide sufficient disclosure of the rationale for the greater liabilities, then the actuary would report as follows:
I have valued the policy liabilities of [the Company] for its [consolidated] balance sheet at [31 December XXXX] and their change in the statement of income for the year then ended in accordance with accepted actuarial practice, ………….
In my valuation, the amount of policy liabilities is $[X]. The corresponding amount in the [consolidated] financial statements is $[Y].
In my opinion, the amount of policy liabilities of $[X] makes appropriate provision for all policyholder obligations and, except as described in the preceding paragraph, the consolidated financial statements fairly present the result of the valuation.
25
Reservation in ReportingReservation in Reporting
Implications- premium liabilities not shown explicitly in the
financial statements
- several items on the balance sheet: UPR, premium deficiency (if any), DPAC, unearned commission and other related assets and liabilities
- Equity in unearned premium as calculated by the actuary - the maximum amount deferrable.
- CICA accounting guideline AcG-3 sets out criteria/limitations on DPAC
Implications- premium liabilities not shown explicitly in the
financial statements
- several items on the balance sheet: UPR, premium deficiency (if any), DPAC, unearned commission and other related assets and liabilities
- Equity in unearned premium as calculated by the actuary - the maximum amount deferrable.
- CICA accounting guideline AcG-3 sets out criteria/limitations on DPAC
26
Reservation in ReportingReservation in Reporting
Implications- For many insurers, premium liabilities recorded
in the financial statements are higher than those calculated by the actuary
- Overstatement of premium liabilities created by limitations on the deferability of expenses under GAAP is not considered an unfair presentation.
- Notes to the financial statements must appropriately disclose the existence of a difference between the recorded amount and the actuary’s estimate of premium liabilities.
Implications- For many insurers, premium liabilities recorded
in the financial statements are higher than those calculated by the actuary
- Overstatement of premium liabilities created by limitations on the deferability of expenses under GAAP is not considered an unfair presentation.
- Notes to the financial statements must appropriately disclose the existence of a difference between the recorded amount and the actuary’s estimate of premium liabilities.
27
Investment IncomeInvestment Income No longer an issue starting with 2003 reporting OSFI requires company to report claims liabilities
on a discounted basis Will be included in determining policy liabilities in
connection with UPR (future cash flow) UPR itself will not be on a discounted basis Other assets/liabilities which are components of
premium liabilities will not be discounted
No longer an issue starting with 2003 reporting OSFI requires company to report claims liabilities
on a discounted basis Will be included in determining policy liabilities in
connection with UPR (future cash flow) UPR itself will not be on a discounted basis Other assets/liabilities which are components of
premium liabilities will not be discounted
28
Discounting IssuesDiscounting Issues
CIA Standards require recognition of time value of money except when conflicting with the law
Provision for adverse deviation must be included:-- claim development-- reinsurance recovery-- interest rate
Payout patterns:-- payout on future losses similar to historical data
Interest rate
CIA Standards require recognition of time value of money except when conflicting with the law
Provision for adverse deviation must be included:-- claim development-- reinsurance recovery-- interest rate
Payout patterns:-- payout on future losses similar to historical data
Interest rate
29
Discounting IssuesDiscounting Issues
Agents balances reduce the investment on UPR Contingent commissions:
-- Over which period does the discount apply?-- What is appropriate PFAD?
Relates to gross liabilities Discount rate on ceded business?
-- same as direct insurer -- reinsurer’s investment returns, policies ?
Agents balances reduce the investment on UPR Contingent commissions:
-- Over which period does the discount apply?-- What is appropriate PFAD?
Relates to gross liabilities Discount rate on ceded business?
-- same as direct insurer -- reinsurer’s investment returns, policies ?
30
Subsequent Events – CIA Guidelines
Subsequent Events – CIA Guidelines
The actuary should correct any data defect or calculation error, which a subsequent event reveals.
The actuary should take a subsequent event into account in the selection of methods and assumptions for a calculation, other than a pro forma calculation
No general rule
The actuary should correct any data defect or calculation error, which a subsequent event reveals.
The actuary should take a subsequent event into account in the selection of methods and assumptions for a calculation, other than a pro forma calculation
No general rule
31
Subsequent EventsSubsequent Events Three criteria
1. Does it provide information about the entity as itwas?
2. Does it retroactively make the entity different?3. Does it make the entity different after thecalculation date?
The actuary should not so take the subsequent event into account if it makes the entity a different entity after the calculation date and a purpose of the work is to report on the entity as it was at the calculation date, but the actuary should report that event.
Three criteria
1. Does it provide information about the entity as itwas?
2. Does it retroactively make the entity different?3. Does it make the entity different after thecalculation date?
The actuary should not so take the subsequent event into account if it makes the entity a different entity after the calculation date and a purpose of the work is to report on the entity as it was at the calculation date, but the actuary should report that event.
32
Subsequent Events Two Examples
Subsequent Events Two Examples
Ice Storm of January 1998
Premium liabilities calculation did not reflect this event. -- did not make insurer different
-- actuarial report on company as it was at 12/31-- could not be expected-- but disclosure was required
Implementation of Bill 164 on January 1, 1994
Calculation did reflect the impact of Bill 164-- known in advance-- did impact future losses on unearned premiums
Ice Storm of January 1998
Premium liabilities calculation did not reflect this event. -- did not make insurer different
-- actuarial report on company as it was at 12/31-- could not be expected-- but disclosure was required
Implementation of Bill 164 on January 1, 1994
Calculation did reflect the impact of Bill 164-- known in advance-- did impact future losses on unearned premiums
33
IASCIASC
UPR and DPAC disappears Concept similar to current policy liabilities in
connection to UPR present value, at the balance sheet date, of cash flow
on account of premium development and of claims and expenses to be incurred after that date on account of the policies in force at that date or an earlier date. (CIA standards)
Fair value – market rate ??
UPR and DPAC disappears Concept similar to current policy liabilities in
connection to UPR present value, at the balance sheet date, of cash flow
on account of premium development and of claims and expenses to be incurred after that date on account of the policies in force at that date or an earlier date. (CIA standards)
Fair value – market rate ??
