Equation for FCF
Since Fulfillment Cash Flow is supposed to be a liability, I think the equation should be
FCF = PV(Loss + Benefits + Expenses - Premium)
(rather than Premium - Losses - etc)
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Since Fulfillment Cash Flow is supposed to be a liability, I think the equation should be
FCF = PV(Loss + Benefits + Expenses - Premium)
(rather than Premium - Losses - etc)
Comments
From the Odomirok text, I understand FCF to be a component of an asset, not a liability.
Graham pointed out that IFRS 17 states that FCF can be treated either as an asset or a liability, depending whether the losses or the premium is bigger. That would mean that FCF itself does not give a directional guidance of the sort you're seeking.