MCT - IFRS: category A capital calculation
Category A includes these 6 types of capital.
1. Common shares issued by the insurer that meet the category A qualifying criteria
2. Surplus (share premium) resulting from the issuance of instruments included in common equity capital and other contributed surplus
3. Retained earnings
4. Earthquake, nuclear and general contingency reserves
5. AOCI (Accumulated other comprehensive income)
6. Residual interest, reported either as equity or as a liability, of owner-policyholders of mutual entities
In the example, Line 540: Other Capital is included as part of category A. I have trouble link Other Capital to any type of capitals above. Can you help me understand why other capital is included? Thanks!
Comments
Actually, I was guessing. The source text didn't state specifically which lines from page 20.11 (Statement of Financial Position - Liabilities and Equity) were included.
The descriptions in section 2.1.1 in the source text don't exactly match the labels on page 20.11. Your second bullet point above states "Surplus" but there is no label for Surplus on page 20.11. I assumed that referred to "Contributed Surplus". Then the last part of bullet point 2 says "other contributed surplus" and that's what I thought was "Other Capital".
As a side note, I know that "Total Equity" was used as a proxy for MCT capital available in this exam problem from 2015-Fall: (Of course, that would also include "Preferred Shares" and all the other items under Policyholders' Equity so it might be a little greater than true capital available.)
P.S. (edited Sep 09, 2022):
Thank for sharing the logic of your thinking. It helps me to see the connections. Thanks!