Hi
For GMM:
In the notes it states that the SII BEL and IFRS BEL could be different, page 13 Chapter 16.
I understand they could be different due to different rules of offsetting and different methods for unbundling contracts (e.g. UL contracts).
However, given both use best estimate assumptions I do not understand how different expense assumptions can apply? Could you explain this please.
Also to clarify I understand that different yield curve assumptions may apply, because discount rates are derived from observable market values for IFRS whereas EIOPA publish for SII. Does this also mean that investment return assumptions are different? And can investment return assumptions be market consistent and not risk neutral so the cost of guarantees may also be different?
Finally, could there also be differences in assumptions relating to contract boundaries which could cause a difference?
Thank you,
Rachael
Last edited: Jan 20, 2024