Calculation of the Solvency Capital Requirement

(1) The Solvency Capital Requirement must be calculated on a going-concern basis.
(2) The Solvency Capital Requirement must be calibrated to reflect all quantifiable risks to which an insurance undertaking is exposed. It is based on both the current business in force and the new business expected to be written over the following twelve months. In respect of the current business in force, the Solvency Capital Requirement covers only unexpected losses. It corresponds to the Value-at-Risk of the basic own funds of an insurance undertaking, subject to a confidence level of 99.5 percent over a one-year period.
(3) The amount of the Solvency Capital Requirement must cover at least the following risks: 1. non-life underwriting risk, 2. life underwriting risk, 3. health underwriting risk, 4. market risk, 5. credit risk, and 6. operational risk. Operational risk also includes legal risks. It does not, however, include reputational risks or risks arising from strategic decisions.
(4) In determining the Solvency Capital Requirement, the effects of risk-mitigation techniques must be taken into account, provided that credit risk and other risks that may arise from the use of these techniques are adequately reflected in the Solvency Capital Requirement.