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FERM Services

Business Valuations

 

FERM has the specialist accounting and actuarial expertise to assist you to perform a net present value of your business.  Using actuarial probabilistic techniques uncertain cash flows can be valued.  The probabilities can be assessed in liaison with your staff.  This work can also assist businesses with budgeting, long term planning and cash flow management.

 

Cemetery & Nursing Home Reserving

 

FERM can actuarially determine for:

·         a cemetery,  the assets required to support the cemetery's perpetual care obligations and for

·         a nursing home, the assets required to meet the home's 'bond' obligations in respect of its existing residents

 

FERM will review the generic  investment strategy required to meet the obligations. 

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Derivative Valuations

 

You may need an independent valuation or audit of one or more derivatives.  These products include:

·         Exotic options such as barrier knock in/out options on

          currency, financial instruments and or commodities.

·         Bond and bill futures

·         Forward rate agreements

·         Bonds or shares with embedded options

·         Property derivatives with indexed face amount and/or coupons

·         Indexed mortgages which have an option to maintain a certain level

          of equity

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 Loan Structuring

FERM can assist you with the design or audit of sophisticated or vanilla loan structures that involve:

·         Derivatives such as options or swaps

·         Multi currency coupon bonds

·         Indexed bonds.  The index may relate to property, a basket of shares or bonds

·         Cash flows in one or more currencies that may be fully or partially hedged

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 Mortgage Calculations

You may need an independent check on the calculation of loan repayments, interest calculations, and loans outstanding, on exotic or vanilla loan products. Further advice can be provided in the following areas:

·         Compliance with rounding and the Consumer Credit Code  

·         Break formulae on fixed rate loans

·         Reverse mortgage valuations

·         Interest rate swap arrangements

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 Project Evaluations

FERM can provide advice on the evaluation methodology of sophisticated projects which involve many uncertain variables.

The process may involve:

·         Probabilistic forecasting

·         Assessment of cost of capital

·         Monte Carlo simulations

·         Assessment of variables such as interest rates, exchange rates , inflation

·         Adjustments for hedging

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Retirement Village Valuations

 

FERM can provide the following services for a retirement village:

-     Periodic cash flow valuation reviews

·     Actuarial calculation of an owner's contingent interest (possibly required as part of annual Financial Condition

      Report for villages operated through a Friendly Society as per Life Insurance Act 1995, Prudential Standard No 1.

-     Financial projections and experience investigations

·     Analysis and summary of the current and historical experience of a Retirement Village;

·      The cash flows can be projected actuarially and separated into new/current occupants allowing for capital

      growth, deferred fees and various contract classes;

·     Meet the requirements of AASB139.

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Risk Management

FERM can examine the risks associated with projects that involve hedging, currency, interest, expense, inflation and other exposures.  Appropriate risk controls can be provided.

Examples of possible problem areas are:

·         Hedging errors

·         Mis-timing of cash flows

·         Errors in assumptions

·         Break errors

·         Misinterpretation of contract provisions

·         Operational risk

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 Training

If you wish to enhance the confidence of your staff, FERM can provide professional training in

·         Financial mathematics

·         Understanding options, futures, swaps and other derivatives

·         Understanding the bond market

·         Understanding foreign currency risk management

·         Understanding real-time economics

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 Valuations of estates and family benefits

 

Family Net Asset Valuations

 

Families may need to assess the value of assets and liabilities for particular parties, under the Family Law Act. Examples occur in the event of divorce or a restructuring of family benefits. Valuations can also be required in connection with Binding Financial Agreements under the Family Law Act to determine values of assets held by family members for either family law or estate wind up purposes.

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Estate Wind up Valuations

 

In the event of death it may be necessary to determine, an independent value of particular assets and or liabilities that involve uncertainty. The cash flows could be contingent on the survival of one or more persons, with allowance for future interest rates, inflation, expenses and other factors. 

An example is a reversionary annuity which increases over time, where the income commences on the death of say the husband and then reverts, at a lower figure, to the wife.

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Superannuation Benefits

 

An independent actuarial valuation of superannuation benefits may be required under the Family Law Act and its regulations, in order to equitably apportion the relevant parts of the estate.

These interests may relate to an accumulation fund, a defined benefit promise plan or existing pension arrangements.

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Valuation and Certification of Life Tenancies

 

FERM can value the entitlement of one or more persons to occupy or lease property.

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