Methods and Assumptions


In the actuarial valuation under 2.1, a firm must use methods and prudent assumptions which:

  1. (1) are appropriate to the business of the firm;
  2. (2) are consistent from year to year without arbitrary changes;
  3. (3) are consistent with the method of valuing assets;
  4. (4) include appropriate margins for adverse deviation of relevant factors which are sufficiently prudent to ensure that there is no significant foreseeable risk that liabilities to policyholders in respect of contracts of long-term insurance will not be met as they fall due;
  5. (5) recognise the distribution of profits (that is, emerging surplus) in an appropriate way over the duration of each contract of insurance;
  6. (6) take into account its regulatory duty to treat its customers fairly under any relevant provision of the FCA Handbook; and
  7. (7) are in accordance with generally accepted actuarial practice.