Skip to main content

Measuring the value of Lincoln Re's R&D

Buy Article:

$54.08 plus tax (Refund Policy)

Abstract:

This case study of the valuation of intangible assets compares an internally generated estimate of discounted cash flow (DCF) with an estimate of knowledge capital (KC). It describes Lincoln Re's mortality research and development (R&D) capability, the knowledge management (KM) strategies used to leverage it and the management decisions that were made to create economic value. This paper reviews a theory of KM and a valuation approach with DCF measures. The decisions to invest in R&D and the Lincoln Mortality System, an expert system for product development, produced a 23.9 percent growth in DCF and created substantial value for Lincoln Re. Using Baruch Lev's approach to KC, it is suggested that 0.45 percent is a good working figure for the return on asset for life insurance firms versus the previously published 10.5 percent due to the overwhelming percentage of financial assets on the balance sheet of financial companies and the fact that the return on financial assets is imbedded in product pricing. The correlation between DCF and KC measures is approximated by a DCF/comprehensive value ratio and the results show 70-80 percent correlation at the enterprise, division and asset levels.

Keywords: Information; Intellectual Capital; Managment; R&d; Reinsurance; Valuation

Document Type: Research Article

DOI: http://dx.doi.org/10.1108/14691930210412836

Publication date: February 1, 2002

mcb/250/2002/00000003/00000001/art00003
dcterms_title,dcterms_description,pub_keyword
6
5
20
40
5

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
X
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more