Can I just check that the supervisory reserves and the solvency capital requirement are two distinct things? So the supervisory reserves are the reserves that are held to demonstrate solvency on a prudent basis, but the SCR needs to be held in addition to these reserves? Would the SCR normally be calculated as a % of the supervisory reserves?
Yes, the supervisory reserves and the solvency capital requirement are two distinct things. To demonstrate solvency, a company needs to cover the sum of (supervisory reserves + solvency capital requirement). It depends on the regulatory regime in a particular country But yes, in some regimes the SCR may be calculated as a % of supervisory reserves. This was (broadly) how this worked in the past in the UK. Best wishes Lynn
