Difference between revisions of "RBC for Holding Companies"
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| − | This is an example of how to calculate the R<sub>1</sub> and R<sub>2</sub> charges when the insurer owns shares in a holding company. '''Note''': The calculation is essentially the same for R<sub>1</sub> and R<sub>2</sub>. The only difference is that you use only ''fixed income | + | This is an example of how to calculate the R<sub>1</sub> and R<sub>2</sub> charges when the insurer owns shares in a holding company. '''Note''': The calculation is essentially the same for R<sub>1</sub> and R<sub>2</sub>. The only difference is that you use only ''fixed income'' assets for R<sub>1</sub> and only ''equity'' assets for R<sub>2</sub>. |
'''Given''': | '''Given''': | ||
| − | + | * market(HC) = 600 ''(market value of holding company HC)'' | |
| − | + | * ownership % = 80% ''(insurer holds this percentage ownership in the holding company) | |
| − | :{| class='wikitable' | + | ::{| class='wikitable' |
|- | |- | ||
!! type of asset !! asset !! distribution | !! type of asset !! asset !! distribution | ||
Revision as of 13:30, 8 September 2019
This is an example of how to calculate the R1 and R2 charges when the insurer owns shares in a holding company. Note: The calculation is essentially the same for R1 and R2. The only difference is that you use only fixed income assets for R1 and only equity assets for R2.
Given:
- market(HC) = 600 (market value of holding company HC)
- ownership % = 80% (insurer holds this percentage ownership in the holding company)
! type of asset asset distribution subsidiary 1 100 20% subsidiary 2 300 60% cash 50 10% other assets 50 10%
