This question asks for applications of internal capital model. The solution gives a couple of bullet points about the reserving i.e. meet statutory reserving requirements and modelling cashflow requirements - assessing the volatility of reserves.... I am a bit confused here as my understanding of the internal model is that it uses an input from the liability cashflow models i.e. BEL - reserves. Therefore the liability models are used for reserving purposes stated above and an internal capital model is not used for these sort of purposes. Can you please clarify?
