Chapter 25- Page 17

Discussion in 'SP7' started by nluashok, Sep 13, 2015.

  1. nluashok

    nluashok Member

    Hi,

    I am slightly confused in example given in page-17 chapter-25.

    "Increased in DAC" is not taken into consideration for calculation of "Shareholder's fund". I think definitely "Increased in DAC" should be taken and
    "Shareholder's fund" should be 276 instead of 273.

    Please suggest.

    Regards,
    Ashok
     
    nluashok, Sep 13, 2015
    #1
  2. Darren Michaels

    Darren Michaels ActEd Tutor Staff Member

    I think you are confusing gross of reinsurance with gross of DAC.

    In the balance sheets given to you on Page 17, when it says gross unearned premium reserve it means gross of reinsurance, albeit still net of DAC.
     
    Darren Michaels, Sep 13, 2015
    #2

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