free estate vs inherited estate - same or different?

Hi
The inherited estate is the expression used to describe surplus assets in the with-profits fund which has been built up from under-distribution to past generations of policyholders.
The free estate is the difference between the with-profit's realistic assets and liabilities (which includes PRE) which in something like a 90/10 fund would likely have been built up via under-distribution so, as noted in the glossary, in UK practice the estate may be referred to as the ‘free estate’ or ‘inherited estate’.
So for SA2, you could use either.
Hope this helps.
Thanks
Em

 

Hi

Yes, that is right, if estate is defined as realistic assets minus realistic liabilities then it will include required capital, such as the SCR which is calculated based on prudent (not realistic) assumptions.

Thanks
Em

 

Yes, if estate is defined as the realistic value of assets less the realistic value of liabilities (as is usually the case) then estate = available capital on a realistic basis, since available capital is also defined as assets less liabilities.

Bear in mind though that there isn't a single universally recognised definition of 'estate' and also that it only relates to a with-profits fund.