L
LennyA
Member
Hi,
In chapter one on Endowment Assurances for Section 3.3 on Capital Requirements, under the Contract Design heading we have the paragraph
The key issue in contract design, as far as capital requirements are concrenerd, is whether the design enables reserves and solvency capital requirements to be kept low. Broadly speaking, the lower the initial reserves, the lower the initial capital requirement. The slower the increase in reserves over the contract's term, the faster any invested capital is released. This issue therefore interacts with the issue of how supervisory reserves are calculated
I don't understand the part that I have made bold in this paragraph. Could someone please explain what it means?
In chapter one on Endowment Assurances for Section 3.3 on Capital Requirements, under the Contract Design heading we have the paragraph
The key issue in contract design, as far as capital requirements are concrenerd, is whether the design enables reserves and solvency capital requirements to be kept low. Broadly speaking, the lower the initial reserves, the lower the initial capital requirement. The slower the increase in reserves over the contract's term, the faster any invested capital is released. This issue therefore interacts with the issue of how supervisory reserves are calculated
I don't understand the part that I have made bold in this paragraph. Could someone please explain what it means?