Asset Valuation Method

[Guest Texas_Acty]

Consider:

MVA=market asset value

AVA=actuarial asset value

t=0 is beginning of year 0

t=1 is beginning of year 1

A=MVA @t=1

B=MVA @t=0

C=Assets purchased during year 0 to 1

D=Assets sold during year 0 to 1

E/(E)=Appreciation/(depreciation) from 0 to 1= A-B-C+D

F/(F)=Appreciation/(depreciation) carried forward from 0 to 1

abs=absolute value operation

AVA @1 = MVA @1

+

Min{abs[(E)+(F)], Max(20% x abs[(E)+(F)], 1% x MVA @1)}

where the 80%/120% corridor around MVA applies

i.e., MVA is increased by an adjustment for net depreciation or decreased by an adjustment for net appreciation

In words, MVA is increased by the smaller of (i) 20% of the net depreciation, or (ii) 1% of the MVA @1, but the increase can be no larger than 100% of the net depreciation, with the overall result constrained by the 80/120 corridor.

Is this method reasonable under the asset valuation method regulation? Comments? Votes? Reasons?