This asset valuation method starts with a preliminary asset value and then adjusts it if it falls outside a corridor. If the preliminary asset value is outside the range defined by the Corridor Upper Bound parameter value multiplied by the asset fund market value and the Corridor Lower Bound parameter value multiplied by the asset fund market value, then the preliminary asset value is decreased (or increased) by the Outside Corridor Adjustment Factor parameter value multiplied by the difference between the relevant corridor value and the expected asset value. This adjustment moves the actuarial value toward, but not within, the corridor.

Enter for the Expected Actuarial Assets (funding) parameter the preliminary value (before adjustment for the corridor) of the assets as of the Valuation Date. Enter for the Expected Market-Related Assets (accounting) parameter the preliminary value (before adjustment for the corridor) of the assets as of the Measurement Date. For years after the baseline year of a forecast, the preliminary funding, or actuarial, asset value is determined as the prior year’s actuarial value adjusted for cash flow and the valuation interest assumption; similarly, the preliminary market-related value is determined as the prior year’s market-related value adjusted for cash flow and the accounting expected return on assets.

If Additional Upper Boundary amounts and their associated Outside Corridor Adjustment amounts are entered, and the preliminary asset value is greater than the Corridor Upper Bound times the market value, the adjustment to the asset value will be based on the ratio of the preliminary asset value to the market value (“the ratio”) and its position in the upper corridors. If the ratio is greater than the largest corridor, then one minus the adjustment associated with the largest corridor will be multiplied by the difference between the ratio and the largest corridor. To determine the final adjustment factor to the asset value, this amount will be added to one plus the sum of the amounts associated with each lower upper corridor, where those amounts are one minus that corridor’s adjustment factor multiplied by the difference between the high boundary and low boundary of that corridor. If the ratio is between the upper corridors, then the adjustment associated with the next lower upper boundary will be the starting point of the calculation. The final adjustment value, a positive ratio, is multiplied by the market value of assets so that the resultant actuarial asset value is greater than the market value but less than the preliminary asset value.

Similarly, if Additional Lower Boundary amounts and their associated Outside Corridor Adjustment amounts are entered, and the preliminary asset value is less than the Corridor Lower Bound times the market value, the adjustment to the preliminary asset value will be based on the ratio of the preliminary asset value to the market value (“the ratio”) and its position in the lower corridors. If the ratio is less than the lowest corridor, then one minus the adjustment associated with the lowest corridor will be multiplied by the difference between the ratio and corridor bound. To determine the final adjustment factor to the asset value, this amount will be added to the sum of the amounts associated with each higher lower corridor, where those amounts are one minus that corridor’s adjustment factor multiplied by the difference between the high boundary and low boundary of that corridor. If the ratio is between the lower corridors, then the adjustment associated with the next higher lower boundary will be the starting point of the calculation. The final adjustment value is multiplied by the market value of assets, so that the resultant actuarial asset value is less than the market value but greater than the preliminary asset value.

Here is an example that illustrates this method:

Market Value of Assets (funding):	1,000
Expected Actuarial Assets :	1,150
Corridor Upper Bound:	1.05 (1.05 * 1000 = $1,050 in this case)
Outside Corridor Adjustment Factor:	0.30

Based on these input values, ProVal computes an actuarial value, after corridor adjustment, of ($1,150 - $1,050)*(1.0 - 0.3) + $1,050 = $1,120. Note: this is a preliminary (not final) asset value if a separate market value corridor override has been specified (in addition to the corridor inherent in the asset valuation method itself). For more information, see the description of the Market Value Corridor parameter, which is found under the topic that defines the asset valuation method.

Check the Exclude administrative expenses from expected assets box to exclude administrative expenses, and in the U.S. qualified mode the PBGC premium (if any), from cash flow in the development of actuarial assets (for a funding asset valuation method) or market-related value of assets (for an accounting asset valuation method) at future valuation dates in a forecast. In the Canadian registered mode, this check box is available only for funding and accounting asset valuation methods (not for a solvency asset valuation method).