Variable Fee Approach

Underlying items tracking maintains a detailed record of the asset and liability positions that generate variable returns to policyholders. The platform calculates variable fees by comparing the expected investment returns on underlying items with the returns guaranteed to policyholders, attribating changes in fair value to the insurance contract liability. Investment return attribution decomposes total returns into components attributable to asset management, insurance risk, and time value effects.

Risk mitigation effects capture the impact of derivatives and other instruments used to hedge variable fee exposure. Under VFA, changes in the financial risk of underlying items flow directly through profit or loss, and Systemorph tracks these movements with full granularity. The calculation engine produces detailed CSM movement analysis showing how opening CSM evolves through interest accretion, experience adjustments, and coverage unit-based release, providing transparency into every component of profit recognition.