1. The purpose of the reserving risk component is to require an Insurer to set aside capital to address the risk that the cost of claims will vary from the amounts recorded as liabilities in the Insurer's balance sheet. This calculation applies only to liabilities in respect of outstanding claims (the risk of deterioration in Premium Liability is addressed in the underwriting risk component in Rule A6.10). The provisions in this section apply the relevant provisions of Rule A4.11 to the segments of a Cell Company.
2. As Insurance Business in Cell Companies may only be carried on through Cells, every Insurer will have a reserving risk component of zero in respect of its Minimum Non-Cellular Capital Requirement.