under IFRS, what level of aggregation should be used for calculating FCFs

oxalisoxalis
edited April 2022 in CIA.IFRS17-DR

Hi,
in battle card 29, we have: any level of aggregation provided estimates of LIC can be allocated back to portfolios and groups,
why is this specific to LIC, we also have FCF component for LRC under the GAM approach, is the level of aggregation for FCF under LRC the same?

Thanks,

Comments

  • Staff-T1Staff-T1

    It's battle card 26 btw. I do not think this is applicable to the LRC because the LRC FCF needs to be calculated on a group of contracts basis. We need a CSM or LC under the GMM method for LRC where this is not needed for the LIC. CSM and LC are done on a group of contracts basis.

  • oxalisoxalis

    ok thank you, so the battle card is specifically asking for the aggregation level for LIC FCF then

  • Staff-T1Staff-T1

    yup that's what the battlecard says

  • oxalisoxalis

    Can we specify in the question that it's specific to LIC, it's unclear from reading the question:

  • Staff-T1Staff-T1

    So I was mistaken in my initial response - You can estimate LRC FCFs at any level of aggregation and allocate as you like too. It's just the CSM or LC that needs to be calculated on a group of contracts basis. In any case, the battlecard should say LRC and LIC. Thoughts @graham?

  • oxalisoxalis

    Thank you very much!!

  • grahamgraham

    I've edited the BattleCard answer to state LIC and/or LRC. Thx!

  • FoTheGreatFoTheGreat

    Hi, I believe the 1 sentence, "From Section 13", in the BA web page about this should be updated as well - LIC to be allocated back to portfolios only right? The source reading did not mention groups here.

    What about LRC? While CSM and LC needs to be on group level, does the final presentation of LRC needs to be on portfolio level or group?

  • Staff-T1Staff-T1
    edited April 7

    That's not right - The source mentions this in section 13 - " To measure a group of contracts, an entity may estimate the fulfilment cash flows at a higher level of aggregation than the group or portfolio, provided the entity is able to include the appropriate fulfilment cash flows in the measurement of the group ... by allocating such estimates to groups of contracts" So you can allocate upwards to a portfolio level or stay at a group level. What do you mean what about the LRC? The CSM and LC are part of the LR, how can they be presented differently

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