Patent ID: 7774256

Claim:
A method of using an apparatus, the method including the steps of: characterizing an ownership interest in an investment from a group consisting of a variable life insurance policy, a regulated investment company, a publicly traded partnership, a hedge fund, an investment company, and any combination thereof, and an average rate of return for the ownership interest in the investment and corresponding statistical measure of volatility of the return, as input to a computer; calculating, by said computer using said average rate of return and said corresponding statistical measure of volatility, a target rate and a fixed upward adjustment rate, as specified under a contractual agreement; calculating, by said computer using said target rate of return and, in the event that an actual rate of return is less than an amount determined as specified under the contractual agreement, said fixed upward adjustment rate and the actual rate of return for a period, an adjusted target rate of return to be credited for an initial period on the ownership interest; computing, by said computer using said adjusted target rate of return, an end of period book value equal to a greater one of a market value for the investment or an amount calculated by applying the adjusted target rate of return to the ownership interest in the investment, as specified under the contractual agreement; calculating, by said computer using further input and said book value, an initial contingent obligation equal to a difference, if any, between the market value and said book value; computing, by said computer using said book value, an amount of contingent obligation for each of a plurality of time periods corresponding to a periodically targeted range of financial protection specified under the contractual agreement, the amount of contingent obligation being variable over said time periods according to the contractual agreement; and generating, with said computer, output including the amount of the contingent obligation for at least one of the time periods.