Max India Limited Financial Overview
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Key Assumptions (1/2)
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LIFE
INSURANCE
Economic Assumptions
■ The EV is calculated using risk free (government bond) spot rate yield curve taken from FIMMDA¹ as at 31st March
2015. The spot rates beyond the longest available term of 30 years are assumed to remain at 30 year term spot rate
level.
■ No allowance has been made for liquidity premium because of lack of credible information on liquidity spreads in
the Indian market.
■ A flat rate adjustment is made to the yield curve such that the market value of government bonds is equal to
discounted value of future cash flows of those bonds.
Samples from the un-adjusted 31st March 2015 spot rate yield curve used:
Year
1
2
3
4
5
10
Rates
8.01%
7.96%
7.93%
7.89%
7.89%
7.95%
15
8.04% 8.12%
20
25
30+
8.03%
7.79%
Demographic Assumptions
The lapse and mortality assumptions are approved by a Board committee and are set by product line and distribution
channel on a best estimate basis, based on the following principles:
Assumptions are based on past experience and expectations of future experience given the likely impact of current
and proposed management actions on such assumptions.
■ Aims to avoid arbitrary changes, discontinuities and volatility where it can be justified.
■ Aims to exclude the impacts of non-recurring factors.
1 Fixed Income Money Market and Derivatives Association of India
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