Simplified Calculation of RA based on CoC Method

NycxBattleNycxBattle
edited April 14 in CIA.IFRS17-2

I just want to clarify a point, its states in the wiki:
target profit margin is allocated between reserve risk, underwriting risk, and other risks that are not relevant to the RA

Is this CoC method for RA exclusively for the profit margin?

Can we use the CoC method for any other RA?

Comments

  • Staff-T1Staff-T1

    Im not sure what you mean by any "other" RA. You either have the RA for the LRC, and RA for the LIC. There is not RA for the profit margin. CoC is a method that can be used for either

  • NycxBattleNycxBattle

    Okay I might misunderstanding the concept than.

    For the RA calculation here, why are we multiplying by the profit margin? I am trying to wrap my head around what it means? I mean I know how to do it mathematically its not too complicated. But I don't understand why we do it or the implication of it.

  • Staff-T1Staff-T1

    When you do a cost of capital calculation you always need a ROE number - You're just replacing ROE with profit margin here

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