Steeneck

Question 1

Steeneck - Commutation opportunities

Answer 1

WC claimant desires cash instead of annuity; liability claim resolved with structured annuity; commutation preventing long runoff; company under supervision may commute

Question 2

Steeneck - Definition of claims commutation

Answer 2

a process where the future value of unpaid claims is current valued to accelerate payment and close the case

Question 3

Steeneck - Attractions for buyer of commutation

Answer 3

accelerated settlement; improvement of wealth; CF for other purposes; admin cost savings

Question 4

Steeneck - Attractions for seller of commutation

Answer 4

accelerated settlement; improved perceived wealth; limited cash flow alternatives; certain result; expense savings

Question 5

Steeneck - Ambivalence point definition

Answer 5

estimate of the highest value the seller is willing to pay the buyer

Question 6

Steeneck - Ambivalence point calculation

Answer 6

X = (X - .95(APV, booked reserve)) x 0.45 + PV