elements needed for discounting calculation

oxalis0217oxalis0217
in CIA.IFRS17-LRC

Hi,

there are 2 similar battle cards:
1. main steps in discounting procedure(same in IFRS and pre-IFRS)

  • payment pattern
  • apply discount factors

2.Under Pre-IFRS17 practice, what 3 things do you need for the discounting calculation?
Assuming you have the nominal value of the liabilities, you need:
• discount rate
• discount rate MfAD
• payment pattern

Is card 1 missing the part of discount rate MfAD? or is it true that IFRS doesn't have a discount rate MfAD? I thought the RA for financial-risk is incorporated into discount rates or into estimate of cashflow in IFRS, so discount rate MfAD is needed just not explicit?

Thank you

Comments

  • Staff-T1Staff-T1

    There is no longer a thing called MFADs under IFRS17. The RA is conceptually similar to MFADs but not exactly. What you need is a margin for uncertainty which exists as the RA, but you can't call them MFADs. Also, the RA is applied on the CFs now, whereas the interest rate MFAD adjusted the discount rate directly which is no longer the case

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