In this paper, we introduce the 3-step hedge-based valuation for the valuation of hybrid claims. We consider an insurance portfolio which is exposed to traded risks, diversifiable risks and non-traded systematic risks. The class of 3-step hedge-based valuations is equivalent with the class of fair valuations. Closed-form solutions are derived for a portfolio of unit-linked contracts under the assumption of independence between financial and non-financial risks. We also consider the additive 3-step valuation and show that this additive valuation is a member of the more general class of 3-step hedge-based valuations.

The price of wine is a key topic among market participants interested in valuing their stock, including dealers and restaurants, and consumers who may be interested in optimizing their purchases. A closely related issue, revaluation is the need to regularly update the value of a stock. This need is especially acute in the growing industry of wine as an investment. In this case, fair-value measurement is compulsory by law. We briefly review methods available to funds and introduce a new quantitative method aimed at achieving compliance with IFRS (International Financial Reporting Standard) 13 for fair valuation. Using auction data on 26,640 lots, we apply this method to compute the current fair value of a basket of 232 different wines. (JEL Classifications: C14, C43, Z11)