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CAS Exam 9 Study Notes: Franchise Value
2019-04-03
My notes on franchise value are now available. These notes are based on the paper Managing Interest Rate Risk: ALM, Franchise Value, and Strategy by William H. Panning. This reading demonstrates how to calculate the franchise value of an insurance company, which is the present value of future renewals. In essence, it is able to assign a dollar value to the company's ability to retain customers. Panning calculates the sensitivity of franchise value to changes in the interest rate, and proposes a strategy for managing interest rate risk by varying premium as the interest rate changes.
Keywords: Actuarial Science, Study Note, Exam 9