Hi, it mentions that for wo profit business , pvfp will increase the assets. when isbthe case? i mean in s2 environment? in a s2 i thought it would decrease the liab. am i missing sth? thanks
Hi Under regulatory capital (SII), there should be very little PVFP as assumptions are based on best estimate. However, there are times when PVFP can arise, such as profits beyond contract boundaries. If these profits are recognised (under economic capital) then the wp fund could recoginise these as an asset on the economic balance sheet. Hope this helps. Thanks Em
