Asset Share

[CityBoy]

Does anyone know what Asset Share means? How do you calculate it? Thanks!

[JMO Fan]

Asset Share is the accumulated financial value of an insurance policy. It is usually measured for a block of policies using increments such as interest and decrements such as mortality, termination, and expenses. It is sometimes used as a proxy for the present value (or expected value) of a life policy, which could be compared with actual cash value to test whether the policy cash value fairly represents the value which the policy should represent to the policyholder.

[CityBoy]

Thanks JMO Fan,

A few follow up questions. Do they use actual experience to do that? Does the insurance company have to keep track with each single policy's cash flow?

[JMO Fan]

Asset share is not rigorously defined (nor universally used), so companies commonly combine industry and company experience to calculate it. Some use it as part of design, testing, and analysis of par policy dividend scales. Most develop asset shares for a block of similar business rather than on an individual policy (e.g., for all issues of one policy form in one calendar year, or for all traditional permanent par policies).

Here's another definition: http://www.answers.com/topic/asset-share-value?cat=biz-fin

[CityBoy]

OK I guess not many insurance companies in US would perform Asset Share. Thanks!