(1) CSM at initial recognition
At initial recognition, is the CSM always equal to the negative of the fulfilment cash flows (−FCF), or is this only the case when the FCF is negative?
(2) CSM after the first premium payment
How is the CSM of 392…
If the AAD adjustment is applied to the discounting of cash flows in the LRC calculation (Duration Excel), what would that adjustment be? In Question 18(c), the time period is annual, and the adjustment applied is -(0.5 - 1/3). Since the time period…
For part (c), the BattleActs commentary states: “When calculating the LRC, you always need to apply an AAD adjustment before discounting. The amount to subtract is always 1/3, derived through calculus you don’t need to understand—just memorize it.” …