Preparing for Principles-Based Capital

As the industry moves towards a principles-based approach to valuation, many life insurers have focused on its potential effect on reserves. However, work is currently underway to apply similar principles to required capital, with similar expected results. But whereas plans for principles-based reserves will initially apply to new business only, proposals for principles-based capital (PBC) are currently targeting both new and inforce business.

As with principles-based regulations for reserves, PBC recommendations are still works in progress. However, information currently available points to several implications that life insurers will need to address.

http://www.transamericareinsurance.com/Media/media_associateArticle.aspx...