EIOPA · 3401
Risk Free Rate (RFR)
- Regulation
- Risk-Free Interest Rate - General questions
- Topic
- Risk Free Rate (RFR)
- Submitted
- 2025-08-05
- Answered
- 2026-03-31
Question
Let’s consider a product with Profit Sharing, where we aim to project the future Balance Sheet and Income Statement stochastically. In such cases, I believe we need to project assets in a risk-neutral setting, meaning we should use the risk-free rate (RFR). Implicitly, when allocating the cash flows generated between the Shareholder and the Policyholder, we are referring to cash flows generated under the RFR. Then, when calculating the Best Estimate Liability (BEL), we discount these cash flows using the adjusted RFR (i.e., RFR + VA). Could you please confirm if my understanding is correct?
Background
Solvency
Answer
This question has been rejected because the matter it refers to has been answered in Q&A 3349 - European Insurance and Occupational Pensions Authority.
This Q&A is published by European Insurance and Occupational Pensions Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.
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