PVIF in EEV

[1495_sc]

PVFP (ie the present value of future shareholder profits)

= PV {Premiums + investment return - claims - expenses + release of reserves}

= PV {Release of prudential margins in reserves}

Can someone please explain how both definitions are equal?

Thank you!

 

[Em Francis]

PVFP (ie the present value of future shareholder profits)

= PV {Premiums + investment return - claims - expenses + release of reserves}

= PV {Release of prudential margins in reserves}

Can someone please explain how both definitions are equal?

Thank you!

Basically, the claims and expenses will be paid from the premium and assets backing the reserves and any prudence in the reserves would then be released as profit. You may want to read the following post: https://www.acted.co.uk/forums/index.php?threads/profit-emergence.17260/#post-68025

Thanks
Em