capital allocation and performance …（资本配置和性能u2026）.pdf

Capital Allocation and Performance Measurement - a Case Study Name King – David McGaughey – Kenneth Address Ernst Young Standard Life Assurance Co Ltd More London Place Standard Life House London SE 1 2AF 30 Lothian Road Edinburgh EH 1 2DH Telephone Tel: +44 20 7951 3599 Tel: +44 131 245 8560 Fax Fax: +44 20 795 1 8010 Fax: +44 13 1 245 8575 E-mail dking1@ kenneth_mcgaughey@ Abstract This paper summarises how the life industry’s approach to capital allocation is changing and sets out a capital allocation framework based on economic value. The paper then goes on to discuss the internal measurement of value. This is illustrated with a case study drawn from the experience of Standard Life in implementing a capital management framework, including a consideration of how performance can be measured. The paper concludes with a discussion of the benefits and challenges of implementing a capital allocation framework. Key Words capital allocation; case study; cost of capital; economic capital; economic value; hurdle rates; performance measurement; risk-based capital. Capital Allocation and Performance Measurement - a Case Study David King (Ernst Young) Kenneth McGaughey (Standard Life) CONTENTS 1. Introduction – the changing approach to capital allocation 2. Capital allocation framework based on economic value 3. Managing value creation 4. Case study – capital management in practice 5. Embedding the Capital Allocation Framework into Standard Life 6. Concluding remarks: Benefits and challenges of implementing a Capital Allocation Framework 2 Capital Allocation and Performance Measurement - a Case Study David King (E