CTHRepealedLegislation
Life Insurance (prudential standard) determination No. 2 of 2012
Standard MethodStandard Method
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Standard Method
29. For life companies using the Standard Method, the prescribed capital amount for a fund is determined as:
(a) the Insurance Risk Charge; plus
(b) the Asset Risk Charge; plus
(c) the Asset Concentration Risk Charge; plus
(d) the Operational Risk Charge; less
(e) an ‘aggregation benefit’ as defined in paragraph 36; plus
(f) a combined stress scenario adjustment.
30. The prescribed capital amount of a fund determined under the Standard Method is intended to be sufficient, such that if a fund was to start the year with a capital base equal to the prescribed capital amount, and losses occurred at the 99.5 per cent confidence level then the assets remaining would be at least sufficient to provide for the adjusted policy liabilities and ‘other liabilities’ of the fund at the end of the year. The other liabilities to be provided for exclude those liabilities that satisfy the criteria for inclusion in the capital base.