The reconciliation of the margin

Learning objectives

• List the movements in the contractual service margin: new contracts, interest accreted at the locked-in rate, changes relating to future service, currency exchange differences and release.L2
• Calculate the closing margin of a group from given movements.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.

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

3 questions

• Which movements appear in the reconciliation of the contractual service margin of a group between opening and closing? More than one answer is possible.L2
• The group of contracts of Cassiopée SA has an opening contractual service margin of {opening_csm}. During the period, new contracts add {new_contracts} to the margin; accretion is calculated at the group's original rate of {original_rate} (case data); a revision of estimates relating to future service decreases the margin by {future_service_decrease}. The share of the margin released for services provided is {release_percent} of the margin before release (fraction derived from coverage units: case data). Calculate the interest, the margin before release and the closing margin.L3
• An analyst increases an opening margin of 5,000 euros by interest accretion of 300 euros, calculated at 6%, the current market rate at the closing date. The group's original rate is 3% (case data). What is the error in this calculation?L3