IFRS 17-PAA Flashcards
1
Q
Describe the Carrying Amount for LRC using PAA (calculated at initial recognition).
A
- premiums received (at initial recognition)
- MINUS acquisition cash flows at that date (unless they are already expensed)
- PLUS any assets for acquisition cash flows derecognized MINUS liabilities previously recognized
2
Q
Identify differences between GMA and PAA for calculating LRC. (3)
A
- PAA is simpler
- PAA doesn’t require estimation of FCFs (Fulfilment Cash Flows)
- PAA doesn’t require a CSM (Contractual Service Margin)
3
Q
Is a group of PAA eligible if an insurer expects significant variability in the FCFs?
A
No, this disqualifies the use of PAA.
4
Q
How can you determine if LRC using PAA differs materially from LRC using GMA?
A
Quantitative assessment:
- calculate using PAA and GMA; then verify that the difference is less than the materiality threshold
Qualitative assessments:
- assess a similar group of contracts
5
Q
If a group of onerous contracts is PAA eligible, what further adjustment to LRC is required?
A
- must add a ‘loss component’ (LC)
- loss component = (LRC using GMA) - (LRC using PAA)