TITLE IU.K. [X1VALUATION AND RISK-BASED CAPITAL REQUIREMENTS (PILLAR I), ENHANCED GOVERNANCE (PILLAR II) AND INCREASED TRANSPARENCY (PILLAR III)]

CHAPTER VU.K. SOLVENCY CAPITAL REQUIREMENT STANDARD FORMULA

SECTION 1 U.K. General provisions

Subsection 6 U.K. Proportionality and simplifications
Article 101U.K.Simplified calculation of the capital requirement for health expense risk

Where Article 88 is complied with, insurance and reinsurance undertakings may calculate the capital requirement for health expense risk as follows:

where:

(1)

EI denotes the amount of expenses incurred in servicing health insurance and reinsurance obligations during the last year;

(2)

n denotes the modified duration in years of the cash flows included in the best estimate of those obligations;

(3)

i denotes the weighted average inflation rate included in the calculation of the best estimate of these obligations, weighted by the present value of expenses included in the calculation of the best estimate for servicing existing health obligations.

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