• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

What is meant by the INITIAL capital requirement

C

curiousactuary

Member
What is meant by the "INITIAL capital requirement" in the context of the core reading from chapter 11 below. Does this mean the SCR?

Core reading: "For example, this could involve selecting a driver (eg reserves or sum at risk) which has an
approximately linear relationship with the required capital or its components. The initial
capital requirement can be expressed as a percentage of that driver, and the projected
capital is then approximated as the same percentage of the projected values of the driver.
 
curiousactuary said:
What is meant by the "INITIAL capital requirement" in the context of the core reading from chapter 11 below. Does this mean the SCR?

Core reading: "For example, this could involve selecting a driver (eg reserves or sum at risk) which has an
approximately linear relationship with the required capital or its components. The initial
capital requirement can be expressed as a percentage of that driver, and the projected
capital is then approximated as the same percentage of the projected values of the driver.
Click to expand...
Hi
The initial capital requirement in the above is referring to the SCR at time zero. However, to work out the Risk Margin we need to project the SCR during each year of run-off of existing business. ie we need to work out initial and subsequent capital requirements. We would then multiply by a cost of capital rate to determine the Risk Margin.
Hope this helps.
Thanks
 
You must log in or register to reply here.
Back
Top