Prudential Regulation Authority Rulebook

1.

A firm must calculate the capital requirement for life expense risk as equal to the loss in its basic own funds that would result from the combination of the following instantaneous permanent changes:

1. (1) an increase of 10% in the amount of expenses taken into account in the calculation of technical provisions; and
2. (2) an increase of one percentage point to the expense inflation rate (expressed as a percentage) used in the calculation of technical provisions.

2.

With regard to reinsurance obligations, a firm must apply those changes to its own expenses and, where relevant, to the expenses of the ceding undertakings.