Net PV
When calculating net PV, why do we need to exclude FutRe from Net UPR rather than from Gross UPR?
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When calculating net PV, why do we need to exclude FutRe from Net UPR rather than from Gross UPR?
Comments
In general, not all of the gross UPR will be earned by the primary insurer - some of it belongs to the reinsurer. The primary insurer's share of the UPR is the net UPR and any insurer costs, which include FutRe, must be paid for from money that belongs to the primary insurer.
That makes sense, thank you!