MCR Non-Life Linear Component

Overview

This calculator implements the Non-Life Linear Component of the Minimum Capital Requirement (MCR) within the Solvency II standard formula.^[1] The Non-Life Linear MCR is defined as the base capital requirement derived directly from the undertaking's non-life technical provisions and premiums before any floor or cap constraints are applied.^[2]

Input Terms

• Technical Provisions (Net of Reinsurance): The value of non-life technical provisions calculated net of expected reinsurance recoverables.^[1]
• Net Written Premiums: The total amount of non-life premiums written by the undertaking during the last 12 months, net of reinsurance.
• Line-of-Business (LoB) Factors: The regulatory factors (e.g., 4.7% or 14.7%) applied to the volume of each non-life insurance segment.

Technical Rationale

The Non-Life Linear MCR is a volume-based measure of capital adequacy. It ensures that the absolute minimum capital floor for non-life business scales linearly with the undertaking's reported obligations and income.^[1]

The calculation sums the product of the prescribed factors and the corresponding technical provisions/premiums for each of the 12 non-life lines of business. This ensures that the undertaking’s MCR correctly reflects its specific business mix and liability profile. The final result represents the non-life contribution to the total Linear MCR.

Important Notes

• Combined MCR: The non-life linear component is added to the life linear component to determine the total Linear MCR, which is then used in the Combined MCR calculation.
• Reporting: The displayed result is intended to support the corresponding standard-formula component feeding the S.28.01 standard-formula reporting view.^[3]