FALL 2014 Q19b
Hi,
I was trying to solve this question under the IFRS 17 regime. If I understand correctly, part B was asking for the Excess/Deficiency Amount for AY 2011, CY 2013. Let's say if I were to solve this problem under IFRS 17, the Excess/Deficiency Amount for AY 2011, CY 2013 would be calculated as follows:
Excess/Deficiency Amount AY 2011, CY 2013 = Undiscounted LIC (AY 2011, CY 2012) - Paid (AY 2011, CY 2013) - Undiscounted LIC (AY 2011, CY 2013).
When I look at the solution, it seems like they were using the beginning balance of CY 2011 instead of CY 2012:
Excess/Deficiency Amount AY 2011, CY 2013 = Undiscounted LIC (AY 2011, CY 2011) - Paid (AY 2011, CY 2013) - Undiscounted LIC (AY 2011, CY 2013).
Why do they use CY 2011 as the beginning balance instead of CY 2012, given the current as at date is Dec 31, 2023
Comments
The reason that they are doing this is because we are looking for the cumulative excess/deficiency ratio which means we have to take into account all calendar years that AY 2011 has gone through. There is a difference between the cumulative excess vs just excess ratio