Matching

Document description

The basic task of actuarial valuation is to compare the quantity of assets with the quantity of liabilities. A refinement is to compare qualities as well as quantities. The qualities of assets and liabilities are their characteristics of cash flow, duration, growth, price volatility, etc. This note considers a conceptual and mathematical framework for matching in the most general terms. Insurance work in the United Kingdom uses the notion of reserves for mismatching. Pension fund valuations in the UK also tend to use a notion of matching when considering the actuarial value placed on the fund.