R
rathi
Member
Hi,
I have a few questions regarding with profits funds.
Principle 11 developed by the CFO Forum states that for with profits business, bonus allowances need to be made within the future liabilities but leaves open how the bonus rates need to be calculated. It also states that assumptions regarding profit allocation between policyholders and shareholders needs to be made.
The EEV is meant to disclose the shareholder value in the business.
1. So my thought process is that the liabilities therefore should not include an allowance for future shareholder transfers even if the liabilities allow for future bonuses for the policyholders. Is my understanding accurate?
2. Also, within the Solvency I (Pillar 1 Peak 1 and Pillar 1 Peak 2) liabilities and Solvency II BEL, is a company expected to allow for future shareholder transfers and policyholder bonuses with bonus rates in keeping with PRE? My understanding is that in the SII BEL, the SHIFT which is treated as an asset on the shareholder balance sheet allows for these transfers and therefore policyholder bonuses are allowed for in the BEL but not shareholder transfers.
3. If shareholder transfers and policyholder bonuses are allowed for in the SI and SII technical provisions, presumably, they are allowed for in the EEV within the free surplus calculation, i.e. assets - liabilities - required capital? If so (implying 1 above is wrong), then how is EEV calculating SHAREHOLDER value?
Thanks,
Rathi
I have a few questions regarding with profits funds.
Principle 11 developed by the CFO Forum states that for with profits business, bonus allowances need to be made within the future liabilities but leaves open how the bonus rates need to be calculated. It also states that assumptions regarding profit allocation between policyholders and shareholders needs to be made.
The EEV is meant to disclose the shareholder value in the business.
1. So my thought process is that the liabilities therefore should not include an allowance for future shareholder transfers even if the liabilities allow for future bonuses for the policyholders. Is my understanding accurate?
2. Also, within the Solvency I (Pillar 1 Peak 1 and Pillar 1 Peak 2) liabilities and Solvency II BEL, is a company expected to allow for future shareholder transfers and policyholder bonuses with bonus rates in keeping with PRE? My understanding is that in the SII BEL, the SHIFT which is treated as an asset on the shareholder balance sheet allows for these transfers and therefore policyholder bonuses are allowed for in the BEL but not shareholder transfers.
3. If shareholder transfers and policyholder bonuses are allowed for in the SI and SII technical provisions, presumably, they are allowed for in the EEV within the free surplus calculation, i.e. assets - liabilities - required capital? If so (implying 1 above is wrong), then how is EEV calculating SHAREHOLDER value?
Thanks,
Rathi