The Control Cycle: Financial Control of a Life Assurance Company.

Goford, Jeremy

doi:10.1017/s0020269x00009750

Cited by 11 publications

(9 citation statements)

References 2 publications

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“…1 ex post (Sunder, 1997, p. 79;cf. Schipper and Vincent, 2003) even if this were possible using accounting numbers-except perhaps for comparing with previous internal estimates of income ex ante in order to improve future estimations (e.g., Edwards and Bell, 1961;Bromwich, 1974;Goford, 1985). This is an information content approach to the conceptual framework and the usefulness of income measures (e.g., Christensen, 2010;cf.…”

Section: : How Useful Is Income No 1 Ex Post?mentioning

confidence: 99%

Hicksian Income in the Conceptual Framework

Bromwich

Macve

Sunder

2010

Abacus

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In seeking to replace accounting conventions by concepts in the pursuit of principles-based standards, the FASB/IASB joint project on the conceptual framework has grounded its approach on a well-known definition of income by Hicks. We welcome the use of theories by accounting standard setters and practitioners, if theories are considered in their entirety. Cherrypicking parts of a theory to serve the immediate aims of standard setters risks distortion. Misunderstanding and misinterpretation of the selected elements of a theory increase the distortion even more. We argue that the Boards have selectively picked from, misquoted, misunderstood and misapplied Hicksian concepts of income. We explore some alternative approaches to income suggested by Hicks and by other writers, and their relevance to current debates over the Boards' conceptual framework and standards. Our conclusions about how accounting concepts and conventions should be related differ from those of the Boards. Executive stock options (ESOs) provide an illustrative case study.

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Section: : How Useful Is Income No 1 Ex Post?mentioning

confidence: 99%

Hicksian Income in the Conceptual Framework

Bromwich

Macve

Sunder

2010

Abacus

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“…In recent years, the actuaries, aware that the valuation methods used for solvency purposes under the DTI regulations understate the performance of a growing life fund, have developed the 'embedded value' technique, Downloaded by [University of Exeter] at 11:15 05 June 2016 using more realistic assumptions, to give a better estimate of the value of the shareholders' interest in the business (Salmon and Fine, 1991;Horton and Macve, 1992a) as well as for profit testing, planning and control (Goford, 1985;cf. Anderson and Binns, 1957).…”

Section: Recent Developments In Life Assurance Accountingmentioning

confidence: 99%

The development of life assurance accounting and regulation in the UK: reflections on recent proposals for accounting change

Horton¹,

Macve²

1994

Accounting, Business & Financial History

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At its beginnings in the late sixteenth century, UK life insurance was originally short-term, often one-year, insurance. Its development into a long-term investment medium exposed a tension between the emerging commercial accountancy conventions for stating financial position and results, based on past transactions, and the forward-looking, actuarial approach needed for the valuation of the business for solvency verification and for decisions about distributions.It is argued here that the first Companies Act in 1844 included insurance companies (unlike banks) with the generality of companies, and subjected them to the same accounting and auditing requirements, by default, as there was not yet sufficient confidence in the techniques and standing of actuaries to rely on specialist actuarial valuations. But the resulting confusion over how to present life insurance company accounts led to gradual recognition of the special nature of the public interest in insurance companies, and the nature of the accounting and other information that should be disclosed continued to be debated at a number of important junctures in the course of the nineteenth century. The major change came when the Life Assurance Companies Act 1870 required periodic actuarial valuation of the life fund. Although this Act also set out a detailed, specialized form of accounts required to show the annual income and expenditure of life companies, in reality these conventional accounts were now little more than an appendage to the actuarial valuation. The dominance of the actuarial valuation for solvency purposes and for Accounting, Business and

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“…Actuarial credibility theory, when combined with the financial managements process based on the actuarial control cycle (Fig. 1), is used to incorporate collateral insurance data and to update assumptions (Goford 1985, Waters 1993, Hart et al 1996).…”

Section: Introductionmentioning

confidence: 99%

“… The control cycle (adapted from Goford 1985 ) shows an integrated way to manage populations. Individual population projections and their interactions are aggregated into a metapopulation model, which is used to predict future population sizes.…”

Section: Introductionmentioning

confidence: 99%

“…An insurance company charges a premium composed of a component for risk, such as the probability of fire, theft, or death during the insurance period, and an allowance for expenses and profit. Goford 1985) shows an integrated way to manage populations. Individual population projections and their interactions are aggregated into a metapopulation model, which is used to predict future population sizes.…”

Section: Introductionmentioning

confidence: 99%

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Incorporating Collateral Data in Conservation Biology

Linacre

Stewart‐Oaten

Burgman

et al. 2004

Conservation Biology

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Conservation biologists often need to set ecological modeling assumptions or estimate parameters from sparse data. In some cases this problem can be addressed by incorporating data from closely related species or from the same species at different sites (i.e., collateral data). Currently no structured methods exist for incorporating such information. An analogous problem in Actuarial science is to set premium rates in situations with little direct data on claim frequency or size. The rates are estimated using actuarial credibility theory, which incorporates collateral data with the direct data. actuarial credibility theory combined with the actuarial control cycle financial management process also provides an adaptive mechanism for updating assumptions. This theory may have some utility for ecologists wanting to incorporate collateral data in an adaptive management framework, a companion to approaches such as Bayesian updating. We describe the historical development of actuarial credibility theory from early ad hoc methods to empirical Bayes approaches. We explore some of the theory's strengths, such as relative simple formulae for incorporation collateral data, and we explore some of the theory's weaknesses, such as the use of the best linear approximation to the Bayes estimate. We illustrate potential applications of the theory using an example on the mortality rate of the Powerful Owl ( Ninox strenua). Incorporando Datos Colaterales a la Biología de la ConservaciónResumen: A menudo, los biólogos de la conservación necesitan hacer supuestos en los modelos ecológicos o estimar parámetros a partir de datos dispersos. En algunos casos se pueden encarar estos problemas incorporando datos de especies cercanamente relacionadas o de la misma especie en sitios diferentes (es decir, datos colaterales). Actualmente no existen métodos para incorporar dicha información. Un problema análogo en la ciencia Actuarial es fijar tasas superiores en situaciones con pocos datos directos sobre frecuencia o tamaño de reclamaciones. Las tasas son estimadas utilizando la teoría actuarial de credibilidad, que incorpora datos colaterales a los datos directos. La teoría actuarial de credibilidad, combinada con el ciclo de control actuarial del proceso de administración financiera también proporciona un mecanismo adaptativo para actualizar supuestos. Esta teoría puede tener utilidad para ecólogos que quieren incorporar datos colaterales en un marco de manejo adaptativo, un acompañante de métodos como actualización Bayesiana. Describimos el desarrollo histórico de la teoría actuarial de credibilidad desde los primeros métodos ad hoc hasta métodos Bayes empíricos. Exploramos algunas de las fortalezas de la teoría, como las fórmulas simples para la incorporación de datos colaterales, y exploramos algunas de sus debilidades, como el uso de la mejor aproximación lineal a la estimación Bayes. Ilustramos las aplicaciones potenciales de la teoría utilizando como ejemplo la tasa de mortalidad de Ninox strenua.

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The Control Cycle: Financial Control of a Life Assurance Company.

Cited by 11 publications

References 2 publications

Hicksian Income in the Conceptual Framework

Hicksian Income in the Conceptual Framework

The development of life assurance accounting and regulation in the UK: reflections on recent proposals for accounting change

Incorporating Collateral Data in Conservation Biology

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