IFRS Considerations - Modelling
The first bullet point says the impact of adverse scenarios on onerous groups should not be absorbed by the CSM but reflected in earnings immediately. I thought that there would be no CSM for onerous groups and a LC instead?
Comments
This is for groups of contracts that are initially profitable (Have a CSM) and during an adverse scenario become unprofitable. Thus, their CSM is derecognized and a LC is recognized while the loss is reflected immediately in the earnings
Ah okay that makes sense, thank you!