I have the following two questions: Question 1 says (after (iii)) realistic assets and realistic liabilities are calculated on a MC basis. Does that mean assets are at market value and liabilities are calculated at a risk free rate? The Examiners Report for Part (V) ends with the following “The impact will also depend on whether there has been a change in the underlying risk free rate; if this has fallen then this increases the ICA”. What is the reason for the increase in the ICA? If the risk free rate falls, and assets are unchanged, ICA should also fall. Am I missing the point?
