Now, i am thoroughly confused Analysis of movement in working capital,analysis of surplus and analysis of change in embedded value all look similar to me!! or am i reading the wrong way. The factors to analyze in working capital i.e. opening balance restated/corrected, economic variances , insurance variances, impact of new business and an unexplained item all look like an analysis of embedded value! Does analysis of movement in working capital apply only to with profits funds? Can the analysis be used to explain profits in the year? will they be same as those from an analysis of surplus/ Somebody sort me out!!
Hi Genesiss They are similar, but not the same They do the same kind of thing, but on 3 different sets of results: Analysis of surplus is looking at the change in the Peak 1 regulatory surplus over a year Analysis of movement in working capital is looking at the change in Peak 2 "assets - liabilities" over a year Analysis of change in EV is, not surprisingly, looking at the change in the EV over the year I think it's to be expected that many of the same sources of surplus arise in all 3, eg mortality surplus/variance as this affects all 3 of these results. The analysis of movements in working capital is required by firms who are required to do Peak 2, ie in respect of with-profits funds if the firm is a realistic-basis firm. Hope this helps reduce the confusion Cheers Lynn
Thanks a lot Lynn. Yes this is clearer as I have now read more on Pillar 1 (Peak 1- Regulatory basis & Peak 2- Realistic basis firms) and Pillar 2 (ICA). I get it that each is meant to communicate to management different aspects of the business or from different angles)
