Financing the embedded value of life insurance portfolios

In May 2004 the CFO Forum harmonized the various efforts of reporting the embedded valueof life insurance companies by issuing the European Embedded Value (EEV) Principles.In this working paper a methodology is proposed to derive a maximum lending amountfrom EEV figures without much additional data requirements from the originating insurer. The approach chosen is similar to that of other financing areas, e.g. real estate finance, where first a prudent best estimate valuation is done and later risk deductions are performed in the form of applying loan to value ratios, e.g. 60-80 % of the prudent amount. Here, this prudent value is called bankable embedded value and the loan to value analysis presented leads to the maximum lending amount. The deductions proposed to arrive at a maximum lending amount are based on parameter adjustments and risk allowances for unexpected risks. There is an analogy with insurers for determining their own capital needs. The methodology proposed is based on the stress test approach which increasingly gains popularity with insurance supervisors in Europe. --European embedded value,embedded value,life insurance policies,maximum lending amount,required capital,risk analysis,risk discount rate,value reporting and analysis,value sensitivity analysis

Intelligent flight control systems

The capabilities of flight control systems can be enhanced by designing them to emulate functions of natural intelligence. Intelligent control functions fall in three categories. Declarative actions involve decision-making, providing models for system monitoring, goal planning, and system/scenario identification. Procedural actions concern skilled behavior and have parallels in guidance, navigation, and adaptation. Reflexive actions are spontaneous, inner-loop responses for control and estimation. Intelligent flight control systems learn knowledge of the aircraft and its mission and adapt to changes in the flight environment. Cognitive models form an efficient basis for integrating 'outer-loop/inner-loop' control functions and for developing robust parallel-processing algorithms

From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992 - 2001

We analyze the distribution and concentration of market incomes in Germany in the period 1992 to 2001 on the basis of an integrated data set of individual tax returns and the German Socio-Economic Panel. The unique feature of this integrated data set is that it encompasses the whole spectrum of the population, from the very poor to the very rich. We find a modest increase in overall inequality of market incomes as measured by the Gini coefficient. However, we also document a substantial drop of median income and a remarkable income growth at the top 0.1% of the income distribution. The increase of income inequality was stronger in East Germany than in West Germany. In both regions, the income concentration process strongly benefited the economic elite, which we define as the richest 0.001% persons in the population. While the elite mainly obtains its income from business and capital, the income share that it receives in form of wage income is increasing.Income Distribution, Top Incomes, Inequality

The use of cost accounting methodologies to determine prices in German health care

In many sectors of the health care system, prices at which providers are reimbursed by payers are not determined by the market mechanism, but rather by a defined administrative process. Depending on the sector, prices are set politically and are negotiated between different actors or are calculated according to a defined procedure, considering cost data from a sample of providers. The selected approach for price setting determines decisively, to which extent prices for certain services reflect the actual costs incurred for these services. A lack of reflection of actual costs can lead to unintended incentives for providers and therefore have implications on the allocative efficiency. Our analysis shows that in Germanys inpatient and outpatient sector, cost data is increasingly considered for price setting while in other sectors such as long-term care and rehabilitation, the use of cost data is still very limited. However, DRG-cost-weights in the inpatient sector insufficiently reflect actual costs incurred. Thus, decision makers in the German health care system rely more on cost data for price setting and improving the accuracy of cost calculations in order to increase allocative efficiency. -- Die Preisbildung für die Erstattung von Leistungserbringern erfolgt in vielen Sektoren des Gesundheitswesens nicht durch den Marktmechanismus, sondern durch einen administrativ definierten Prozess. Je nach Sektor werden politische Preise vorgegeben, unter den Akteuren verhandelt oder nach einem festgelegten Verfahren, unter Berücksichtigung von Kostendaten aus einer Stichprobe von Leistungserbringern, berechnet. Das gewählte Verfahren der Preisbildung determiniert in entscheidendem Maße, inwieweit die Preise für die erbrachten Leistungen die realen Kosten der Leistungserbringer für diese abbilden. Eine mangelnde Reflektion der Kosten in den Preisen kann zu Fehlanreizen für die Leistungserbringer und mithin zu einer Fehlallokation von Ressourcen führen. Im Rahmen dieser Untersuchung zeigt sich, dass in Deutschland im stationären und ambulanten Bereich zunehmend detaillierte Kostendaten für die Preisberechnung herangezogen werden, während dies in anderen Sektoren wie Pflege und Rehabilitation bislang nur sehr bedingt erfolgt. Es zeigt sich jedoch, dass auch im stationären Sektor die DRG-Relativgewichte bislang nur unzureichend die Kosten für die entsprechenden Leistungen abbilden. Insgesamt muss in Deutschland für die Preisbildung im Gesundheitswesen mehr auf Kosteninformationen für die Preisberechnung zurückgegriffen und die Verursachungsgerechtigkeit der Kostenkalkulationen verbessert werden, um die Allokationseffizienz zu erhöhen.

From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992-2001

We analyze the distribution and concentration of market incomes in Germany in the period 1992 to 2001 on the basis of an integrated data set of individual tax returns and the German Socio-Economic Panel. The unique feature of this integrated data set is that it encompasses the whole spectrum of the population, from the very poor to the very rich. We find a modest increase in overall inequality of market incomes as measured by the Gini coefficient. However, we also document a substantial drop of median income and a remarkable income growth at the top 0.1% of the income distribution. The increase of income inequality was stronger in East Germany than in West Germany. In both regions, the income concentration process strongly benefited the economic elite, which we define as the richest 0.001% per-sons in the population. While the elite mainly obtains its income from business and capital, the income share that it receives in form of wage income is increasing.Income distribution, top incomes, inequality

Sustainable Development Management Factors in The Regional Economy of Ukraine

Introduction. The functioning of the Ukrainian economy with a large number of restrictions necessitates its restoration on the basis of high-quality strategizing, taking into account foreign experience. The formation of financial support tools for the development of a regional development strategy raised the question of the need to change financial strategies to ensure the conditions for sustainable development, which determined the relevance of the study. Aim and tasks. The aim of this study is a theoretical and methodological review of modern financing of regional projects in Ukraine at the subregional level and the provision of proposals for their conceptual improvement in order to ensure sustainable development of the economy based on the European experience of regional strategizing. Results. The research contains a thorough modern analysis of individual factors of sustainable development of the regions of Ukraine in the medium-term perspective, namely: use of the opportunities of the administrative-territorial system; effective financing of regional development; concepts and models of "green" development of the regions of Ukraine. The need to organize a qualitatively new financing of regional development with the aim of achieving stable economic growth in post-war Ukraine is substantiated, and ways and forms of state assistance for this process are proposed. Based on the indicators of tax revenues in Ukraine in 2015–2021, a conceptual model of a system of institutions at the district (subregional) level is proposed that contributes to regional development, taking into account smart specialization and environmentalization. For its effective functioning, a mechanism for financing such a system is proposed based on the fiscal scheme of deductions from corporate income tax in the estimated amount for each territorial level. Conclusions. Synchronization of the administrative-territorial division with European countries made it possible to implement the EU experience in financial support of the sub-regional level of management and to offer a new vision of this process in Ukraine. Forecast calculations of the percentage of deductions from the tax revenues of enterprises' income tax to the relevant development funds were carried out using the apparatus of economic and mathematical modeling. The prospects for sustainable development and models for achieving this goal are analyzed, within which the vision, regional, and sectoral goals of such models are systematized