Adjustments to the margin

Learning objectives

• Explain that changes in estimates relating to future service adjust the margin, whereas those relating to past service are recognised in profit or loss.L2
• Determine, for a given change in estimate, whether it adjusts the margin or profit or loss.L3

Normative references

• IFRS 17 §44The closing contractual service margin of a group equals the opening margin adjusted for new contracts, interest accreted at the rate locked in for the group, changes in fulfilment cash flows relating to future service, currency exchange differences and the amount released for services provided.
• IFRS 17 §B96The changes in fulfilment cash flows relating to future service that adjust the margin include in particular experience adjustments arising from premiums received for future service, changes in estimates of the present value of future cash flows in the liability for remaining coverage, differences relating to investment components and to policyholder loans, and changes in the risk adjustment for non-financial risk that relate to future service.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• At the closing date, Elvire SA identifies two changes for a group. C1: the administration costs expected for the remaining coverage period are revised upwards by 200 euros. C2: the claims of the year exceed by 80 euros those that were expected for that year (current service). Which treatment complies with the rule?L3