LIC vs LRC
Through the readings, there are few definition of LRC, some are more simple high level and some are more detailed.
How come there is no formula for LIC?
Under GMA LRC = PV(FCF) + CSM
How about LIC? Is LIC just: LIC = PV (FCF), since this is claims that already incurred, we just need to take the PV of the future claims cashflow?
Also it mentions that we can use PAA given LRC uses PAA, how would that work? If we not predicting the future cashflow, how would we get the value of LIC?
Comments
Yes, LIC is just PV(FCF). LIC is the same regardless of whether you use PAA or GMA