Hello
If you have a look at Question 1.12 in the notes it discusses this point.
"Benefit amount - reserve"
and
"Benefit amount - asset share"
both make sense as a definition of profit, even though they're referring to different things!
"Benefit amount - reserve" is the profit/loss (on the supervisory reserving basis)
at the time the claim happens.
"Benefit amount - asset share" is the
overall profit/loss on the policy.
Imagine a policy has asset share of 500, reserve of 600, and claim amount 800.
If the company has to pay the claim, it makes an overall loss on the policy of 300. However, it only has to come up with an extra 200 of capital to pay the claim (it had already had to provide the other 100 in order to set up a reserve bigger than the asset share).
Click to expand...