Reinsurance held is measured on assumptions consistent with those for the underlying contracts, and its cash flows allow for the reinsurer's risk of non-performance, collateral and losses from disputes included; the risk adjustment reflects the risk passed to the reinsurer. Rather than unearned profit, the CSM here stands for the net cost or net gain of buying the cover, and it is measured by adding together the fulfilment cash flows, previously recognised balances derecognised, cash flows arising on day one, and any income recognised under 66A; a net cost that relates to events before the purchase is expensed straight away. Afterwards the CSM is adjusted for new contracts, interest at the locked-in rates, 66A income, reversals of the loss-recovery component, future-service changes in fulfilment cash flows (unless the matching change on the underlying contracts did not adjust their CSM or came from the PAA onerous test), currency differences and the services received in the period. When the entity books a loss because onerous underlying contracts are first recognised as a group or are added to a group, it adjusts the reinsurance CSM and recognises income, creating a loss-recovery component within the asset for remaining coverage (B119C to B119F). Changes caused by the reinsurer's non-performance risk never adjust the CSM, and reinsurance held can never be onerous.
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.