When calculating BEL under Solvency II for With profits, is it the same as when we calculate Realistic liability under Solvency I Pillar I peak/ICA 1. So is it right to say we can calculate BEL for WP under Solvency II as : a) BEL is WPBR based on the prospective reserve (Pv[Outgo]+PV[Expenses]- PV[Income]) where the liability is split between Guaranteed Liability and Discretionary Liabilities b) WPBR + FPRL where WPBR is based on Asset Shares, in this case is Asset share the guaranteed Liability ? 2. if we use Asset Shares, then Shareholder Transfers should be excluded right? Is Asset
Hi I would keep the terminology separate. For the exam remember that: When calculating SII BEL for business that incorporates a discretionary element, the BEL must be calculated separately for the guaranteed and future discretionary benefits, where a stochastic calculation may be suitable. The calculations need to reflect realistic management actions and policyholder behaviour. The future discretionary benefits should relate to normal expected bonus distributions only and should not include the distribution of the estate unless a formal distribution plan has been approved by the PRA. Shareholder transfers relating to future bonuses will not be covered in the BEL. Hope this helps. Best of luck Em
