IFRS17 sample-20

ShimiReenShimiReen
in CIA.IFRS17-2

In IFRS17 sample-20, in the calculation of the BoY Capital, they divide the capital by 1.5 and multiply by 2. Why is that?

Comments

  • Staff-T1Staff-T1

    You divide by 1.5 to go from the supervisory capital required (150%) to the MCR (100%). You then multiply by 2 to get to the target 200% MCT ratio for the operating target

  • MarianneCMarianneC

    Can you provide more details on why we are going from the supervisory capital required to the MCR?

  • MickyBMickyB
    edited April 21

    I have the same question as Marianne. On top of that:

    1. How does this relate to the Bonus Question in the excel file practice questions where we use minimum capital required*1.5?

    2. Also, in part A we remove the diversification credit just to get the insurance risk which makes sense. But part C mentions that the actuary has decided not to add an additional diversification credit to the RA calculated in B, isn't it already removed when we subtracted the 1074?

  • Staff-T1Staff-T1
    I basically need 2*MCR which is the operating target. You are given 1.5MCR. Dividing by 1.5 gives you MCR, then multiply it by 2 to get 2MCR.
    The bonus question uses 1.5MCR as the target ratio. This question specifically says they would like to use 200% of MCR.
    For question 2, you are removing the diversification credit amongst insurance, market, credit and operational risk. The diversification credit referred to here is the one implicit in the insurance risk capital required, basically reflecting the fact that insurers have a diverse book of business. This is noted in the MCT paper
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