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Math for Stable Value (SV) Separate Accounts

Math for Stable Value (SV) Separate Accounts

Self-correcting SV crediting rate (CR) formula:
CR = (1 + 0.01*YTM) * (MV/BV)^(1/D) - 1 – F,
CR is the SV crediting rate, YTM is the yield-to-maturity of the underlying portfolio, BV is the book value (or contract value), MV is the market value, F is the wrap fee. When rates go up, MV < BV & CR < YTM; when rates go down, MV > BV & CR > YTM.
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