Components of Insurance Firm Value, and the Present Value of Liabilities

Components of Insurance Firm Value, and the Present Value of Liabilities

David F. Babbel
Financial Services

This chapter discusses the relationship between the market value of insurance company owners’ equity and various components that contribute to that value. The effect of firm insolvency risk on each component of value is discussed in turn. One natural consequence of this analysis is a conceptual framework for estimating the value of insurance liabilities.

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