MCT Expected L/R

wilsonchan18wilsonchan18
in CIA.IFRS17-LRC

Does this Expected L/R referring to the one form Step 2 for LC Calculation under PAA?

Thanks and Warm Regards,
Wilson

Comments

  • Staff-T1Staff-T1

    The source defines it as: "The expected loss ratio for MCT is a best estimate of the future ELR that is applied to the estimated revenue for the remaining coverage period."
    This looks like what is used in step 2 yes

  • wilsonchan18wilsonchan18

    Thanks :wink:

  • cornedovcornedov

    I came across this question and one observation I had was the ELR for MCT should account for the time value of money, while the LC under PAA calculation has a separate discounting adjustment.

    Section 8.2 in the source says "The ELR would reflect the time value of money, in accordance with IFRS 17, but it would not include the risk adjustment."

    I would assume the ELR in the LC under PAA calculation would be undiscounted because the discounting is done separately in the next step.

  • Staff-T1Staff-T1

    Yes you are correct

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