RBC for Holding Companies
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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%