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How is SCR related to own funds then? Why is the definition of Are we saying that tax expense (included in NUR calculation) will cancel out due...

2. i) For impact on reserving, the solution mentions that reserving would not have a significant impact as "charges should be set to match...

Hi, I am curious to follow this thread. Will shareholder fund be rebalanced if liabilities increase? Also, this example doesn't consider capital...

Yes, thank you

Yes 2 iv) If the question mentioned that actual mortality experience was 0.5% and expected experience was 1%, assets = liabilities as no free...

Can someone please clarify today if possible?

Sept 2021- Q1, part ii) Examiner's report for interest rate up and credit spread up mentions that 'not offset by any change in VA' I did not...

Thanks a lot!

Yes thank you!

Ok. In the comment above where Lindsay has posted, it mentions that investments are projected using realistic return and then discounted using...

Would this mean that EV requires 3 assumption basis- 1. Assumptions (statutory) for projecting liabilities 2. Assumptions (Realistic) for...

Yes alright. Thank you so much!

Alright. Yes surely! However, I am concerned that this is not as intuitive- the fact that target level of available capital is a percentage of...

April 2023. Q 2 ii)

Yes. In one of the past year questions, there was a discussion around how can we reduce available capital. In the solution, we have considered...

Regarding counterparty risk- will this not be higher for Country A as it is reinsuring its liabilities? Or would it be same for both countries?...

Sounds reasonable. Thank you

Is this not possible? Based on your response above?

Hi Em, I could not follow this clearly. Can you help with an example please? I have shared my understanding below. Say an insurer finds suitable...

I did not understand why variable fee is not a part of fulfilment cashflow. Can someone please elaborate in simple terms?

Unlike Solvency II BEL, would IFRS17 BEL consider future premium beyond contract boundaries?

Also, when analyzing change in SCR, what does 'change in 1 in 200 yr calibration' and 'inclusion of different risk factors (if using internal...

Hello, In addition to choosing own stresses and correlation matrices, does the insurer also have discretion with respect to the risks for which...

Perfect, thank you!

Regarding internal model tests for getting approval, can you help me with simplification of profit and loss attribution test? Does this mean...

Alright. Similar to how EIOPA publishes risk free yield curve on a monthly basis, they would be publishing VA and MA fundamental spread also every...

Can someone please share few examples of currency risk and concentration risk per market risk module for SCR?

Regarding volatility adjustment's application- The purpose is to reduce forced sale of assets in the event of extreme bond spread movements. As...

Yes. Thank you

Thank you, this was helpful!

Free surplus = Assets- TP- SCR How is present value of future profit margins reflected here? Is there any example which will be helpful here?

Thank you

Alright. So are we saying that free surplus would only account for negative BEL? (Negative BEL is equivalent to asset, hence it will be a part of...

Alright. So should we mention explicitly that all of these expenses and TP will be only over and above initial premium received in exam style answers?

In part iii) of the same question, we have talked about investment strategy of immediate annuities and term assurance. For term assurance, the...

Also, I understand that SCR is a subset of the total capital maintained by insurance company. While SCR is the only capital shown in Solvency II...

Surplus in Solvency II balance sheet is calculated as (own funds - SCR). Free surplus (for calculating expected return on net assets component of...

X4 assignment Q4.2 is a good question to test this concept. If you would like more context.

Offbeat but could someone clarify if critical illness in UK (and generally) is typically single premium or regular premium? Claim is surely a...

Sure. Thanks a lot!

Alright. Thank you for clarifying! Sometimes it is just not clear to me how much depth is expected for SCR impact justification although it seems...

On second thoughts, are we saying that even when we think of interest risk SCR, this capital pertains to change in risk free interest rate only....

Yes. Here, it is mentioned that the scenario is- credit spreads widening on corporate bonds Why would the interest rate impact be second order?...

Thank you!

Circling back to credit spread widening and its impact on SCR. (Q1 iii c) As we know that BEL is also affected, why don't we talk about impact...

ii) charges (to asset share) will be easier to increase on CWP compared with AWP. Why would this be? I thought AWP has more variable charges hence...

In case there isn't any matching adjustment and say credit spread increases, will it still affect the valuation (risk free) interest rate? I don't...

Alright. Makes sense. At an aggregate level, although there is no impact on charges, if interest rate increases, non unit reserve would still...

Same question, credit spread increase part- An increase in spreads will reduce the value of assets. Agree. It is likely that there are...

I just came across a similar question in September 2018. Q1, part i) Interest rates up- the solution mentions following For the unit-linked...

Alright. For exam purpose, I will keep risk neutral/market consistent approach in mind when considering value of assets which don't have a readily...

Alright. I revised Core Reading again to look at the relevant part. It mentions mark to model as long as it is market consistent (which is risk...

Continuation of vii) Contract boundary for UL in Solvency II like regime- how is it relevant ? The question mentions that the premium is not...

vii) Where is it mentioned in the Core Reading that the assets are expected to earn a risk free rate only? In the solution, we have considered...

spread risk is higher because there is no matching adjustment allowed in B How can we establish this relation?

Alright.

Alright. BEL= asset share + CoG. CoG reflects the guarantees which asset share may not cover. Hence, for claims in excess of asset share, will we...

In my opinion, dividend income is already taxed at source when distributed hence if insurer includes it again in I, it will be subject to double...

Q1. v) Although I understood the impact of most risks, can someone elaborate on interest rate risk, spread risk and counterparty risk? For...

Thank you, this was food for thought!

Yes but reserve would also subtract PV of premiums from PV benefits. The final payout is equal to maturity benefit only. Reserve would be...

Yes. Thank you! Missed the derivation while revising.

Similarly, what is the reason for not deducting claims as a part of insurer's expenses? I understand that we surely need to consider claims and...

@Lindsay Smitherman or anyone else, can you please help?

This was very helpful. Thank you!

Thank you, Lindsay. A correction for #4 for future reference- Carried forward and so made available to offset against any profit arising in...

Is this capital actually released? How does it affect financial statements?

Yes alright. Anything to add with respect to whether IFRS4 was more beneficial for insurers or not? If actual profit was higher than actually...

Hello- I have a follow up question for non-BLAGAB tax. Following scenarios are mentioned for offsetting loss against profit in Core Reading....

Also, how is #3 a problem for regulator (hence the need for IFRS17)? I understand that recognizing full profit for long term contract at inception...

Thank you