Fulfillment cash flows (FCF) constitute all the relevant cash flows that fall within the boundary of a certain contract for determination of the future profit in an insurance contract, which is generally the excess of the insurance contract liability over the risk-adjusted present value of probability weighted estimates of future cash flows (FCFs). Additionally,, specific tax amounts are factored in for the calculation of fulfillment cash flows.

Cash flows within the boundary of a contract are those relating directly to the fulfillment of the contract, including certain transaction-based taxes, such as premium taxes, value added taxes, and goods and services taxes. Fulfillment cash flows also include levies, such as guarantee fund assessments and fire service levies, that arise directly from existing insurance contracts or that can be attributed to respective contracts on a reasonable and consistent basis. These cash flows also consist of payments by the insurer in a fiduciary capacity to meet tax obligations incurred by the insured (policyholder), as well as tax payments specifically chargeable to the policyholder.

Cash flows within the boundary also include any other items such as certain income taxes (e.g., policyholder taxes) in specific jurisdictions.

Overall, the major components of fulfillment cash flows are:

• expected/ estimated cash flows (explicit, unbiased and probability weighted estimates): premiums expected to be received from policyholders and claims expected to be paid out to them.
• discounting to reflect time value of money and the financial risks related to the cash flows (specifically those not included in the estimates of future cash flows)
• a risk adjustment for non-financial risk (as reflecting required compensation for risk taking as as well as risk diversification).