Combined Approach - Is the Top-Down Discount rate adjusted for market and credit risk?

lotsofpieslotsofpies
in CIA.IFRS17-DR

Hi!

In section 4 - Extra information, it's noted that "The reason this is called a "combined approach" is that it uses parts of both the top-down and bottom-up approaches. You start with a reference portfolio (that's the top-down approach) but you don't make credit or market risk adjustments to it. Instead, you use this reference portfolio only in calculating the LLP. Once you have the LLP, you go back to the bottom-up approach and add the LLP to the risk-free rate to get the final selected discount rate."

Is this still accurate? Or should it say that we DO make credit and market risk adjustments to it. I noted that just above there is a comment changing the wording from October 19th.

When looking at the Excel Appendix, in the "2 - Current Curve" tab, I note that Q13-Q22 (the top-down adjusted yield used in the bottom-up approach) matches AI13-AI22 (the top-down indicated yield).

Not sure if I'm misunderstanding something here, so want to make sure!

Thanks!

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