EIOPA · 260
260
- Regulation
- Guidelines on loss-absorbing capacity of technical provisions and deferred taxes
- Article
- 206
- Submitted
- 2015-10-26
- Answered
- 2019-10-16
Question
If, for the calculation of the LAC of TP, the result in the scope of some sub-module, an undertaking calculate a net capital charge higher than the gross capital charge, the undertaking is supposed to set the net value equal to the gross value? Or only the maximum floor of zero only applies at the level of the difference between the BSCR and nBSCR? This is a situation that is happening in the scope of interest rate shock.
Answer
According to Article 206 Par. 2 of the Commission Delegated Regulation the net Basic Solvency Capital Requirement shall be calculated in accordance with Section 1, Subsection 1 to 7 of Chapter V but with the modifications set out in the same paragraph. There is no provision for limiting the capital requirement for a sub-module in this calculation to the corresponding value in the calculation of the Basic Solvency Capital Requirement. The floor set out in Article 206 Par. 1 of the Commission Delegated Regulation applies only at the level of the BSCR and nBSCR with the result that if the nBSCR is larger than the BSCR then the adjustment for the loss-absorbing capacity of technical provisions is zero.
This Q&A is published by European Insurance and Occupational Pensions Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.
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