The purpose of this session was to get a high-level direction from the Board on the cash flows that would be included in the measurement of insurance liabilities for both an exit notion or a fulfilment notion. After a brief update on the expected time table for the project the staff turned to the actual topic of the session.

The staff pointed Board members towards a detailed table in the agenda papers that contained a detailed list of guidance on determining current estimates of expected cash flows (largely taken from the Discussion Paper) showing the similarities and differences when applied to an exit or fulfilment notion.

Staff highlighted the high degree of similarity of both approaches from a cash flow estimation perspective.

While many Board members where generally supportive of the analysis presented, some were concerned over the interaction of components of measurement that were to be discussed at future meetings (in particular, the margin). Others expressed reservation that the analysis implied that the margin was realised over the premium period, not over the risk-taking period, which might be significantly longer in certain circumstances. On Board member was particularly concerned that changes in administrative expenses, for example, would be recognised in total in the period the change in estimate of these expenses occurred. This member preferred recognition of the change over future periods.

Another Board member pointed out that he could not assess the appropriateness of the analysis presented if he did not know the proposals on the other measurement components.

The session closed with no explicit decisions made.