PIN A4.2.1

Subject to Rule A4.2.2, an Insurer must calculate its Minimum Capital Requirement according to the formula:

MCR = DRC + IVRC + OARC + OLRC + CRC + SFAC + URC + RRC + LIRC + AMRC

Where the following definitions apply:

Term Definition
MCR Insurer's Minimum Capital Requirement;
DRC Insurer's default risk component;
IVRC Insurer's investment volatility risk component;
OARC Insurer's off-balance sheet asset risk component;
OLRC Insurer's off-balance sheet liability risk component;
CRC Insurer's concentration risk component;
SFAC Insurer's size factor adjustment component;
URC Insurer's underwriting risk component;
RRC Insurer's reserving risk component;
LIRC Insurer's Long-Term Insurance risk component; and
AMRC Insurer's asset management risk component.