Question ID: 385
Regulation Reference: Guidelines on loss-absorbing capacity of technical provisions and deferred taxes
Article: 206
Status: Final
Date of submission: 04 Sep 2015
Question
The article mentions how to compute the net capital at sub-module level, but don't go forward to the final formula of "Adj TP". In reference to the generic formula in article 206 of Delegated Acts, can we do the following simplification (since FDB have already capped the adjustment) : Adj TP = - max (BSCR - nBSCR; 0) ?
EIOPA answer
The formula to calculate “Adj TP” is provided in Article 206(1) of Delegated Regulation 2015/35, which is as follows:
AdjTP = -max (min (BSCR – nBSCR;FDB) ;0).
The formula indicates that the Loss Absorbency Capacity of TP needs to be calculated with taking into account the final additional cap of FDB at group level. In this sense the simplification proposed is not correct.