EIOPA · 3223
Solvency Capital Requirement (SCR)
- Regulation
- (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
- Article
- 192
- Topic
- Solvency Capital Requirement (SCR)
- Submitted
- 2025-01-10
- Answered
- 2025-04-30
Question
When an insurance company enters a reinsurance agreement on a funds withheld basis, where the premium for the reinsurance agreement is retained by the undertaking as collateral for payments of the reinsurer, - If the fund is part of the asset portfolio of the insurance company and hence shocked for market risk, can the entire amount held in the said fund be used to reduce the recoverable against the reinsurer without discounting for any further economic effects, i.e., can the factor F in the Loss Given Default formula (Article 192 of DR (EU) 2015/35) be assumed as 1?
Answer
This question has been rejected because the issue it deals with is already explained or addressed in Q&A 2178. Q&A 2178 provides the European Commission response, which clarifies the attribution of the appropriate values for the factor F for the calculation of the Loss Given Default in article 192 of DR (EU) 2015/35.
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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