What is deemed as 'best practice' when valuing Unit Linked Guarantees?

Answer: Mark Hayhoe - Aegon 'The answer to this question depends on your specific focus. In simple terms, the value of a policy with guarantees is still the value of the units held in the underlying investment funds. In order for the provider to manage the risks it is taking on, it invests the guarantee charges in financial instruments that will increase in value to reflect any increase in the value of the guarantee. So how do we set the value of the guarantee charges? We calculate the charge based on the cost of the hedge assets (taking account of underlying product charges;...