Shifali Sarkar
Made first post
Hello Everyone
I have a doubt in one of the solvency capital requirement questions. April 2019 Qtn 1, part iii.
When there is an increase in value of equities, then the SCR will increase. This is because there is an increase in the amount of assets stressed under equity submodule within SCR.
Now please refer to Sep 2021, Q1, part ii. It says adverse movement for the company in respect of equity risk is the downward stress. But downward movement will lower the solvency capital requirements. This is because the assets will be reduced.
I am getting confused between these two things. As per my understanding, anything that leads to higher capital requirements for the company puts a strain on it. Then why is the adverse direction for equity stress is down. Request to please help on this topic. I have not worked in UK market, hence a bit detailed explanation will be very helpful.
I have a doubt in one of the solvency capital requirement questions. April 2019 Qtn 1, part iii.
When there is an increase in value of equities, then the SCR will increase. This is because there is an increase in the amount of assets stressed under equity submodule within SCR.
Now please refer to Sep 2021, Q1, part ii. It says adverse movement for the company in respect of equity risk is the downward stress. But downward movement will lower the solvency capital requirements. This is because the assets will be reduced.
I am getting confused between these two things. As per my understanding, anything that leads to higher capital requirements for the company puts a strain on it. Then why is the adverse direction for equity stress is down. Request to please help on this topic. I have not worked in UK market, hence a bit detailed explanation will be very helpful.