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Real Value Consulting
Приєднався 21 лют 2020
Real Experience, Real Value
Individuals and businesses face a wide array of problems on a day to day basis. Some of these problems require external help to solve.
Real Value Consulting was established in 2021 to solely provide real value to clients. Specifically, we are passionate in helping individuals and businesses in the area of finance, insurance and data.
This UA-cam channel is dedicated to providing free content that is of Real Value to all individuals and businesses.
Individuals and businesses face a wide array of problems on a day to day basis. Some of these problems require external help to solve.
Real Value Consulting was established in 2021 to solely provide real value to clients. Specifically, we are passionate in helping individuals and businesses in the area of finance, insurance and data.
This UA-cam channel is dedicated to providing free content that is of Real Value to all individuals and businesses.
Real Value IFRS 17 Webinar 3 – Mechanical Applications
Real Value Consulting - IFRS 17 Webinar 3 - Mechanical Applications
This was the third webinar in the IFRS 17 webinar series hosted by the FSAA during 2022.
It is focused on the mechanical applications behind some of the concepts that were introduced in the previous webinars. Where the previous webinars outlined IFRS 17 levels of aggregation and key IFRS 17 terms, this one examines the mathematics behind the measurement of IFRS 17 liabilities within a given group. Questions aimed to be addressed in this session include:
◼ How do the Premium Allocation Approach (PAA) and the General Measurement Model (GMM) differ in principle?
◼ How is the contractual service margin (CSM) calculated?
◼ How can we determine the fulfilment cash flow (FCF) components?
◼ How can we calculate the liability for remaining coverage (LfRC) and the liability for incurred claims (LfIC) under the PAA and the GMM?
◼ Under what scenarios might the LfRC differ between the PAA and GMM?
◼ Is your product eligible to be measured under the PAA?
This webinar is expected to be more technical than the previous webinars and will contain some worked numerical examples. A base level of understanding of IFRS 17 is recommended when attending this webinar.
Slides can be found on our website:
www.realvalueconsulting.com/free-resources
0:00 - Introduction
5:43 - Measurement Overview
10:57 - GMM Mechanics
35:45 - PAA Mechanics
48:30 - PAA Eligibility
59:38 - What's Next?
1:02:50 - Questions & Close
This was the third webinar in the IFRS 17 webinar series hosted by the FSAA during 2022.
It is focused on the mechanical applications behind some of the concepts that were introduced in the previous webinars. Where the previous webinars outlined IFRS 17 levels of aggregation and key IFRS 17 terms, this one examines the mathematics behind the measurement of IFRS 17 liabilities within a given group. Questions aimed to be addressed in this session include:
◼ How do the Premium Allocation Approach (PAA) and the General Measurement Model (GMM) differ in principle?
◼ How is the contractual service margin (CSM) calculated?
◼ How can we determine the fulfilment cash flow (FCF) components?
◼ How can we calculate the liability for remaining coverage (LfRC) and the liability for incurred claims (LfIC) under the PAA and the GMM?
◼ Under what scenarios might the LfRC differ between the PAA and GMM?
◼ Is your product eligible to be measured under the PAA?
This webinar is expected to be more technical than the previous webinars and will contain some worked numerical examples. A base level of understanding of IFRS 17 is recommended when attending this webinar.
Slides can be found on our website:
www.realvalueconsulting.com/free-resources
0:00 - Introduction
5:43 - Measurement Overview
10:57 - GMM Mechanics
35:45 - PAA Mechanics
48:30 - PAA Eligibility
59:38 - What's Next?
1:02:50 - Questions & Close
Переглядів: 564
Відео
Real Value IFRS 17 Webinar 2 - Core Measurement Components
Переглядів 508Рік тому
Real Value Consulting - IFRS 17 Webinar 2 - Core Measurement Components This was the second webinar in the IFRS 17 webinar series hosted by the FSAA during 2022. It delves deeper into some of the IFRS 17 concepts introduced previously. This webinar aims to help you gain a better understanding of some of the key IFRS 17 terms through both a technical and intuitive lens. Where the first webinar o...
Real Value IFRS 17 Webinar 1 - Level of Aggregation
Переглядів 797Рік тому
Real Value Consulting - IFRS 17 Webinar 1 - Level of Aggregation This was the first webinar in the IFRS 17 webinar series hosted by the FSAA during 2022. With IFRS 17 fast approaching, insurance accounting professionals are seeking further detail and training on the potential application of this standard. This is the first webinar in the IFRS 17 webinar series and sets the scene for future webi...
Financial Statements - Income Statement
Переглядів 5194 роки тому
This video walks through some of the issues IFRS 17 tries to address regarding the Income Statement (also called Profit or Loss Statement) for insurance companies. The key points are: - IFRS 17 aims to make insurance company financial statements more comparable to non-insurance companies - Insurance revenue is supposed to be aligned to the service that insurance companies provide to the custome...
Asset for Insurance Acquisition Cash Flows - Allocations
Переглядів 4214 роки тому
In the December 2019 and January 2020 IASB Board meetings, amendments regarding insurance acquisition cash flows were tentatively finalised. This means that there'll be an identification, allocation, asset and impairment testing element to insurance acquisition cash flows. This video focuses on explaining what exactly an "allocation" means in this context and to what extent we need to recognise...
Ext1 - Projectile Motion - Question Requesting a Proof #1
Переглядів 564 роки тому
A moderate question in the topic of Projectile Motion for Extension 1 Mathematics students.
LfRC PAA Eligibility Testing
Переглядів 7264 роки тому
This video describes (at a high level) what the PAA eligibility test is about, why you may want to do it, and the principles behind doing it. When I recorded this video, I thought that the box to the right was off screen, but somehow it was in the screen!
Portfolios & Groups
Переглядів 2774 роки тому
This video explains the concept of portfolios & groups required under IFRS 17. The Standard paragraphs contained within this video are from the original Standard issued in 2017.
LfRC - GMM - CSM Quick Example
Переглядів 6 тис.4 роки тому
This video shows a very quick example of how coverage units influence the emergence of profit under the General Measurement Model (GMM).
LfRC - PAA Quick Example
Переглядів 3 тис.4 роки тому
A very quick example of the mechanisms of the LfRC under the PAA. In this example, the assumptions are: - Contract length is 2 years and eligible for PAA - Premiums of $1,000 received upfront - Insurance acquisition cash flows of $200 paid upfront - Premium revenue recognised evenly over 2 years - Insurance acquisition cost expensing is even over 2 years - Claims of $100 per year (not important...
Have you please share the pdf
This is brilliant video! best for IFRS 17 so far! appreciate. :)
Very helpful!
Glad it was helpful!
Thank you for the knowledge sharing. However, for the LfRC at end of year 1, I was expecting to see 500 and not 400. I think you should have deducted 400 from 800 + 100 and not 500. 500 is somewhat a gross premium for the first year i.e. it includes provision for commission for the first year whereas the 800 + 100 has the first year commission of 100 deducted. So deducting 500 appears like a double deduction of commission. I also note that LfRC is the reserve in respect of the future obligations, which in this case are claims, expenses and future commission accrual i.e. I do not think the LfRC of 400 is sufficient to cover those obligations. Does the IFRS 17 balance sheet show insurance acquisition asset. If not, then the LfRC=400 would make sense.
Hi Shelton, Good to see you working through the example! The LfRC under the PAA at the end of each period depends on: 1. The premiums received (which increases the LfRC). In this case this is $1,000 2. The premiums earned (which decreases the LfRC). In this case this is $500 due to earning half of the total amount each year. 3. The acquisition costs paid (which decreases the LfRC). In this case this is $200 4. The acquisition costs amortised (which increases the LfRC). In this case this is $100 due to amortising half of the total amount each year. If you put it together, it's $1,000 minus $500 minus $200 plus $100 which equals to the $400. The example in the video splits the $400 into the original LfRC at initial recognition (which was $800) and then the movement in subsequent measurement (moving it to $400). The paragraphs of IFRS 17 that specify this can be found in paragraph 55 (a) and (b). You're 100% right that the LfRC is the reserve in respect of future obligations, but what you've described is actually the GMM approach :) Basically the conceptual difference between the PAA and the GMM is that while they both try to estimate the same thing (the reserve in respect of the future obligations), the PAA arrives at this quantum using a retrospective approach (i.e. premiums and acquisition costs paid/received and earned) while the GMM arrives at this quantum using a prospective approach (i.e. discounting those future cash flows to the present). You're also right that the insurance acquisition costs are now embedded within the measurement of the LfRC under IFRS 17. By the way, there's some more free videos on our website where I gave 3 separate seminars (with slides) during 2022: www.realvalueconsulting.com/free-resources
Thank you sir for this useful summary of the PAA approach. I would love it if you explained a bit further why claims do not feature in the PAA approach. Surely I thought they might form the LIC even for contracts that are PAA eligible. Thank you for taking time to create this video. A truly valuable summary of the PAA approach.
Hi Robert, Good question! They do actually form as part of the LIC in the PAA as you pointed out. Were there other topics that you feel that you would like to be covered in the future? I'll actually be doing an updated (and more professional) talk of the PAA vs the GMM on the 2nd of December via the FSAA. The link is here: fsaa.com.au/event/49748/ifrs-17-webinar-3-mechanical-applications-online-only
What is LfRC stands for ?
Hi Dian - it stands for the Liability for Remaining Coverage. Basically meaning that it's the portion of the insurance obligations relating to the unexpired part of the policy. For example, if you have a 12 month policy and you are 9 months into the policy term, then the LfRC will relate to the insurance obligations attaching to the final 3 month term (the future) and the LfIC relates to the expired 9 month term (the incurred term).
In the second year, how you got 75?
Please upload more videos like that. Really helpful!