Best estimate

(1) The best estimate corresponds to the probability-weighted average of future cash flows, taking account of the time value of money (expected present value of future cash flows) and using the relevant risk-free interest rate term structure.
(2) The calculation of the best estimate must be based on current and credible information and realistic assumptions. It is based on adequate, applicable, and relevant actuarial and statistical methods.
(3) In projecting the future cash flows, all incoming and outgoing cash flows needed to settle the insurance liabilities over their term are taken into account.
(4) The best estimate is calculated without deduction of the amounts recoverable from reinsurance contracts and from special purpose vehicles. These amounts are calculated separately under section 86.
(5) For currencies and national markets for which the adjustment named in Article 77e(1), letter c, of Directive 2009/138/EC is not included in the implementing acts under Article 77e(2) of Directive 2009/138/EC, no volatility adjustment is applied to the relevant risk-free interest rate term structure for the purpose of calculating the best estimate.