Fixed assets valuation of a large operator for insurance purposes

Client

Mining company - operator in the prospecting, extraction, collection, logistics and sale of natural gas

Objective

To determine, for insurance purposes, the replacement value (COR / CRN), depreciation, and actual cash value (ACV) of the company`s fixed assets.

Approach

Sales comparison and cost approaches were used to estimate the replacement/reproduction costs of the enterprise`s fixed assets. The actual cash value (ACV) of the valuation object was calculated as the total value minus physical depreciation.

Most of the objects included in the valuation were unique and specialized, built for specific purposes relating to production organization and natural gas extraction. The market of such objects is limited.

Estimation of comparable fixed assets showed that their book value was higher than the market value due to the construction, installation, and extreme conditions in their particular geographical location.

Results

Swiss Appraisal derived the actual cash value (ACV) of the valuation objects, which was subsequently used by the insurer to determine the size of the policy and the insurance rate.



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