IFRS 17 for a Unit Linked Policy

Home Forums Life IFRS 17 for a Unit Linked Policy

Viewing 1 post (of 1 total)
  • Author
  • #5028
    spyros georgatos

    Hello to everyone, I have the following question regarding the CSM under VFA.

    Suppose you have a UL policy with the difference between inflows and outflows be negative (let’s say -100), i.e the policy is loss-making.

    Moreover suppose that the Risk Adjustment, although it exists, is immaterial and held to 0, for simplicity.
    Therefore the fulfilment cash flow (FCF) is -100+0=-100.
    The CSM at initial recognition is max(-FCF,0)=100. Therefore, I recognize a positive unearned profit at inception although the policy is loss making.

    What am I missing here? Is my thinking right?

    Thank you all for your time

Viewing 1 post (of 1 total)
  • You must be logged in to reply to this topic.