R
rathi
Member
Hi,
I'm getting a little confused between asset share calculations and surplus calculations.
In case of asset shares, we are only required to look at the actual cashflows. So this does not include reserves held.
However, in case of surplus, we do consider reserves held.
What I don't understand is that if in case of with profits business, we declare bonuses based on the surplus and at the same time try to ensure that the asset share is close to the sum assured plus accrued bonuses, how would that link be achieved if in one case we do consider the impact of bonuses and in the other we don't?
Or are we considering impact of reserves implicitly in the calculation of asset share via the cost of capital? If so, in a question where the cost of capital (in percentage terms) is provided and the reserving basis is provided, how would one calculate the actual cost of capital incurred on each policy's asset share?
Please help!
Thanks,
Rathi
I'm getting a little confused between asset share calculations and surplus calculations.
In case of asset shares, we are only required to look at the actual cashflows. So this does not include reserves held.
However, in case of surplus, we do consider reserves held.
What I don't understand is that if in case of with profits business, we declare bonuses based on the surplus and at the same time try to ensure that the asset share is close to the sum assured plus accrued bonuses, how would that link be achieved if in one case we do consider the impact of bonuses and in the other we don't?
Or are we considering impact of reserves implicitly in the calculation of asset share via the cost of capital? If so, in a question where the cost of capital (in percentage terms) is provided and the reserving basis is provided, how would one calculate the actual cost of capital incurred on each policy's asset share?
Please help!
Thanks,
Rathi