ASOP 20: Discounting of Reserves

Question 1

Risk free approach, discounting

Answer 1

Use rate close to risk free rate – fixed income assets with low investment risk and similar timing characteristics to unpaid losses

Question 2

Portfolio approach, discounting

Answer 2

Anticipated return on a selected asset portfolio

Question 3

Discounting disclosures

Answer 3

Assumptions/support; difference between discounted/undiscounted; risks/uncertainties with timing of payments; any material deviations from ASOP 20; change in assumptions