Difference between revisions of "RBC for Holding Companies"
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(Created page with "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.") |
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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. | + | 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''': | ||
| + | |||
| + | : '''market(HC)''' = 600 ''(market value of holding company HC)'' | ||
| + | : '''ownership %''' = 80% ''(insurer holds this percentage ownership in the holding company) | ||
| + | |||
| + | :{| class='wikitable' | ||
| + | |- | ||
| + | !! type of asset !! asset !! distribution | ||
| + | |- | ||
| + | || subsidiary 1 || 100 || 20% | ||
| + | |- | ||
| + | || subsidiary 2 || 300 || 60% | ||
| + | |- | ||
| + | || cash || 50 || 10% | ||
| + | |- | ||
| + | || other assets || 50 || 10% | ||
| + | |} | ||
Revision as of 13:29, 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%
