Exam Committee Response: IFRS 17 (March 9, 2022)

I included a summarized version of the questions in the forum posts and specifically requested answers to these questions:

1. Does the FCF include or exclude premiums?
2. Are premiums treated as positive or negative quantities?

This is the response I received from the CAS: (Contact Information for Syllabus Questions)

Hi Graham,

Here is the response to your question from the syllabus working group. Please let me know if you have any additional questions for them. Thanks again for taking the time to make us aware of your question.

IFRS17:

Fulfilment Cash Flow changes depending on the point of time which it was evaluated. Fulfillment cash flow at initial recognition when used to determine CSM, fulfillment cash flow meant the probability weighted present value of both future cash inflows and outflows (along with risk adjustments) over the period of the insurance contract. At this point, it does include premium. However, assuming one time premium payment upfront, throughout the lifetime of the insurance contract, FCF meant the probability weighted present value of the claims and risk adjustments only. The graph on page 12 of the IFRS-LRC paper (see below) would explain this concept.

Best,

Robin