Is the inherited estate under SII either free surplus or own funds?

Discussion in 'SA2' started by curiousactuary, Jul 25, 2020.

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  1. curiousactuary

    curiousactuary Member

    Is the inherited estate under SII either:
    1. free surplus (Own funds less SCR)
    2. or own funds?
    3. Also the estate is defined as realistic assets over realistic liabilities. Are the assets and liabilities under Solvency II considered to be realistic? I know Solvency II assumptions are not prudent but are best estimate and the valuation is - market consistent, but I was confused as to what realistic meant - is it the same as best estimate?
     
    curiousactuary, Jul 25, 2020
    #1
  2. Lindsay Smitherman

    Lindsay Smitherman ActEd Tutor Staff Member

    See the following thread:
    https://www.acted.co.uk/forums/inde...-vs-inherited-estate-same-or-different.15983/

    As indicated in that discussion, there isn't a single universally recognised definition of 'estate' and it is something that a company defines for itself internally - it isn't a prescribed calculation or a published figure.

    If     estate is defined as the realistic value of assets less the realistic value of liabilities (as is usually the case) then estate could be considered to be equivalent to 'own funds' (not equivalent to free surplus: the SCR will be part of the estate, as explained in the thread indicated above). However, a company might instead consider it to be assets in excess of the BEL (rather than in excess of the whole TP).
     
    Lindsay Smitherman, Jul 27, 2020
    #2

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