FCF
Hi Graham,
Suppose we have the following for a group of contracts:
1. RA= CU750
2. PV(Outflow)=CU4250
3. Premium=CU3500
Since the outflow=4250 > Inflow, group in onerous. Therefore no CSM.
Total Liability=5000
Why is the FCF=5000?
I thought the FCF=PV Cash Flow + RA= 4250-3500+750=1500
Comments
The FCF is 1500. Not sure why you are implying it would be 5000