Hi
I would like to check my understanding of the impact of NB on surplus arising.
In a simplified approach to surplus Assets - Liabilities (BEL only) (as described in the notes).
Assets - increase by assets actually accrued during the period less liability cashflows expected to be paid out on new policies during the period
--> it might be that if NB is added before economic variances are applied to IF business then we would use the expected assets to be accrued during the period
--> liability cashflows expected to be paid out are included rather than actuals because the non-economic variances are applied after the NB is added, however would also be possible for the actual liability cashflows to be used here, IF the NB was added after non-economic variances had been applied to IF business.
Liabilities - increase by the BEL (as at valn date) for these new IF policies at end of period
However if we add in SCR and RM then:
Assets - as above plus SCR and RM expected to be released over the intravaluation period
--> not sure if this would be SCR and RM actually released or expected to be released.
--> I think it might be what is actually released in terms of asset changes but what is expected to be released wrt liabilities. Actual changes wrt liabilities would be captured in the non-economic variance item.
Liabilities - as above plus increase in the RM and SCR (as at valn date) for IF policies at end of period.
Thank you,
Rachael
PS lots of detail I know but just trying to check my understanding of the possible approach in the notes so that I can understand the impact of changing the order. Thank you.
Last edited: Jan 20, 2024