section 4. A company may temporarily beocme excess E due to: 1. Large BLAGAB profits, for example from a weakening of the liability valuation basis, which would result in the minimum profit test biting. Question: which component of I-E computetation would the above come in? It would need to either decrease I or increase E or both, correct?
Weakening the liability valuation basis means that reserves are reduced, which increases profit. So "I-E" stays the same but the BLAGAB profit increases, hence there is more chance that the minimum profit test bites (i.e. that profit > I-E).
