Q27
"Single view of the profitability of portfolios. The valuation of the fulfilment cash flows of
the portfolios and groups would be more consistent when transitioning from LRC to LIC.
This is especially true for long-tail coverages like auto accident benefits and auto bodily
injury" -> Why do we want to have it consistent?
Comments
To make comparison easier between the LRC and LIC. If the discount rates are different, the long-tailed nature of the business amplifies the effect of a differing discount rate on the PV FCF
How do we know that half of the claims have been paid out? Is it because the 50% payment pattern occurs in Year 1? I misunderstood that Year 1 here means 2024.
It's stated in the question that the company starts writing in 2023. You are then provided information on Dec 31 2023 so it's pretty obvious one year has passed