Hi, In this question, we are analysing the components of change in surplus. For the expense change variance- the actual experience expense change variance is shown only for the asset and not for the liabilities, I do understand that liability is based on expected numbers so it should not be impacted by the actual expense figure during the year. But what if this question is for the analysis of change in MCEV, pls correct whether my understanding is correct- In MCEV to calculate the expense experience variance during the year, we would have calculated its impact on Net assets and PVIF separately, and when we say PVIF the change should have been shown in the liability?
Hi Yes, we calculate the impact on net assets and PVIF separately. Regarding expense variances, if expenses are more than expected, then this will impact net assets but not PVIF. PVIF would only be impacted if the experience variance has resulted in lower inforce book than expected. I would suggest, if the analysis is of EV, then separate analysis into net assets (assets minus liabilities) and PVIF.
