Investment Income Calculation

bkmlocksbkmlocks
in CIA.MfAD

The Battle Code for this wiki includes calculation for Investment Income calculation. Is this part of a different paper ? Went through the CIA.MFAD source but could not find it.

Also, just a very small thing but I think the battle code also includes the discounted LR calc which is not in the current syllabus as mentioned above.

Thank you :)

Comments

  • grahamgraham
    edited June 2020

    The investment income calculation comes from CCIR.ARinstr, but as you noted in your post linked below, there is no mention of Income from Insurance Operations in the latest version of the CCIR instructions.

    I was a bit nervous about removing this from the wiki this time because I didn't know if it was a mistake on the part of the CAS. (They make lots of mistakes in the syllabus by the way.) I was afraid it still might show up on the exam even though it isn't supposed to.

    I will make a note in the wiki that it isn't on the syllabus any longer, but I want to wait another exam cycle before I remove it. (Actually, I never remove anything, I just archive old stuff. Sometimes the CAS removes a reading then brings it back a couple of exam cycles later.)

  • bkmlocksbkmlocks

    Thank you for confirming ! As a side note, looks like the 2019 draft Sample Annual Return (10.60) explicitly crossed Investment Income for Operations:

    But like you said, it might just be a mistake so better be safe !

  • grahamgraham

    You know, I went back to look at the CCIR instructions because of your comment and I'm going to add something to the wiki. The change in the CCIR instructions is:

    • Overlay approach adjustment for financial instruments

    Then just a little further down it says:

    • Under the overlay approach, an insurer is permitted, but not required, to reclassify from P&L to OCI an amount equal to the difference between:
    • a) The amount reported in P&L when IFRS 9 is applied to qualifying financial assets (that are newly measured at FVPL under IFRS 9); and
    • b) The amount that would have been reported in P&L if IAS 39 were applied to those assets.

    That looks like a type of question the examiners like to ask. If I were studying for the exam, I would memorize it. I don't think it's a very good question because the overlay approach is temporary, and ending Dec 31, 2020, but they might try to see who actually read the updated CCIR instructions.

    Just to be clear, the question I think they might ask is:

    • Under the overlay approach, what amount is an insurer is permitted to reclassify from P&L to OCI.

    The answer would be:

    • the amount equal to the difference between (a) and (b) above.
Sign In or Register to comment.