Difference between revisions of "RBC for Holding Companies"
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| Line 6: | Line 6: | ||
* ownership % = 80% ''(insurer holds this percentage ownership in the holding company) | * ownership % = 80% ''(insurer holds this percentage ownership in the holding company) | ||
| − | ::{| class='wikitable' | + | ::{| class='wikitable' style='text-align: center;' |
|- | |- | ||
! type of asset !! book value of asset <br> (fixed income) !! distribution | ! type of asset !! book value of asset <br> (fixed income) !! distribution | ||
|- | |- | ||
| − | || subsidiary 1 || 100 || 20% | + | | style='text-align: left;' | subsidiary 1 || 100 || 20% |
|- | |- | ||
| − | || subsidiary 2 || 300 || 60% | + | | style='text-align: left;' | subsidiary 2 || 300 || 60% |
|- | |- | ||
| − | || cash || 50 || 10% | + | | style='text-align: left;' | cash || 50 || 10% |
|- | |- | ||
| − | || other assets || 50 || 10% | + | | style='text-align: left;' | other assets || 50 || 10% |
|} | |} | ||
Revision as of 13:33, 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 book value of asset
(fixed income)distribution subsidiary 1 100 20% subsidiary 2 300 60% cash 50 10% other assets 50 10%
