Prudential Regulation Authority Rulebook

4A.1

This Chapter:

1. (1) applies to a composite firm, other than a pure reinsurer; and
2. (2) does not apply to managing agents.

4A.2

The notional general insurance MCR must be equal to the following: 

$$\mathrm{N}\mathrm{M}\mathrm{C}{\mathrm{R}}_{\mathrm{g}\mathrm{i}}=\mathrm{m}\mathrm{a}\mathrm{x}(\mathrm{N}\mathrm{M}\mathrm{C}{\mathrm{R}}_{(\mathrm{c}\mathrm{o}\mathrm{m}\mathrm{b}\mathrm{i}\mathrm{n}\mathrm{e}\mathrm{d},\mathrm{g}\mathrm{i})},\mathrm{A}\mathrm{M}\mathrm{C}{\mathrm{R}}_{\mathrm{g}\mathrm{i}})$$

where:

1. (1) NMCR_{(combined,gi)} denotes the notional combined general insurance minimum capital requirement prescribed in 4A.3; and
2. (2) AMCR_gi denotes:
   1. (a) the absolute floor prescribed in Minimum Capital Requirement 3.2(1); or
   2. (b) where Minimum Capital Requirement 3.2(5) applies, the sum of the absolute floor prescribed in Minimum Capital Requirement 3.2(2).

4A.3

The notional combined general insurance minimum capital requirement must be equal to the following:

$$\mathrm{N}\mathrm{M}\mathrm{C}{\mathrm{R}}_{(\mathrm{c}\mathrm{o}\mathrm{m}\mathrm{b}\mathrm{i}\mathrm{n}\mathrm{e}\mathrm{d},\mathrm{g}\mathrm{i})}=\mathrm{m}\mathrm{i}\mathrm{n}(\mathrm{m}\mathrm{a}\mathrm{x}(\mathrm{N}\mathrm{M}\mathrm{C}{\mathrm{R}}_{(\mathrm{l}\mathrm{i}\mathrm{n}\mathrm{e}\mathrm{a}\mathrm{r},\mathrm{g}\mathrm{i})},0.25\cdot (\mathrm{N}\mathrm{S}\mathrm{C}{\mathrm{R}}_{\mathrm{g}\mathrm{i}}+\mathrm{A}\mathrm{d}\mathrm{d}\mathrm{o}{\mathrm{n}}_{\mathrm{g}\mathrm{i}})),0.45\cdot (\mathrm{N}\mathrm{S}\mathrm{C}{\mathrm{R}}_{\mathrm{g}\mathrm{i}}+\mathrm{A}\mathrm{d}\mathrm{d}\mathrm{o}{\mathrm{n}}_{\mathrm{g}\mathrm{i}}))$$

where:

1. (1) NMCR_(linear,gi) denotes the notional linear minimum capital requirement for general insurance business prescribed in 4A.4;
2. (2) NSCR_gi denotes the notional general insurance SCR; and
3. (3) Addon_gi denotes the part of any capital add-on imposed by the PRA, which has been apportioned by PRA to the general insurance business of the firm.

4A.4

The notional linear minimum capital requirement for general insurance business must be equal to the following:

$$\mathrm{N}\mathrm{M}\mathrm{C}{\mathrm{R}}_{(\mathrm{l}\mathrm{i}\mathrm{n}\mathrm{e}\mathrm{a}\mathrm{r},\mathrm{g}\mathrm{i})}=\mathrm{M}\mathrm{C}{\mathrm{R}}_{(\mathrm{g}\mathrm{i},\mathrm{g}\mathrm{i})}+\mathrm{M}\mathrm{C}{\mathrm{R}}_{(\mathrm{l},\mathrm{g}\mathrm{i})}$$

where:

1. (1) MCR_(gi,gi) denotes the linear formula component for general insurance and reinsurance obligations relating to general insurance business calculated in accordance with 4A.5; and
2. (2) MCR(l,gi) denotes the linear formula component for long-term insurance and reinsurance obligations relating to general insurance business calculated in accordance with 4A.5.

4A.5

MCR_(gi,gi) and MCR_(l,gi) must be calculated in the same way as MCR_(linear,gi) and MCR_(linear,l) referred to in Minimum Capital Requirement 3B and 3C respectively, but the technical provisions or premiums written used in the calculation must only relate to the firm’s general insurance and reinsurance obligations.