Zénith SA issues a group of twelve-month contracts eligible for the premium allocation approach. It receives 1,200 of premiums at issue and pays 120 of acquisition cash flows, which it deducts from the liability (it does not use the option to expense them). Case convention: insurance revenue and the amortisation of acquisition cash flows follow the time elapsed; 3 months have elapsed. Calculate the initial liability for remaining coverage, the revenue of the period and the closing liability.
- Premiums received at issue
- 1,200
- Acquisition cash flows deducted from the liability
- 120
- Months elapsed since issue
- 3