Transitional Measures Impact

Overview

This calculator provides the Transitional Measures Impact within the undertaking's capital-adequacy monitoring framework.^[1] The impact is defined as the measure of the capital-relief derived from the gradual transition (typically over 16 years) from previous regulatory-regimes to the full Solvency II valuation rules.

Input Terms

• Transitional on Technical Provisions: The deduction applied to the technical provisions to smooth the impact of the transition.^[2]
• Transitional on Interest Rates: The gradual adjustment to the risk-free rate term-structure.^[1]
• Amortization Factor: The percentage-reduction in the transitional-benefit each year (e.g., 1/16th reduction).

Technical Rationale

The Transitional Measures Impact is a fundamental component of the undertaking’s financial-strength monitoring during the phase-in period of Solvency II. It ensures that the undertaking’s capital safety-net is correctly positioned relative to the "day-one" impact of the directive.

The calculation compares the undertaking's solvency position with and without the application of the transitional-adjustments. This ensures the undertaking can identify the "cliff-edge" risk as the transitional-benefits phase out. The results feed the SCR Ratio, Solvency Ratio Summary, and S.22.01 views.

Important Notes

• Gross vs. Net SCR: This calculator determines the transitional-impact on the Net Solvency Position after all diversification and LAC adjustments have been applied at the Aggregation Layer.
• Regulatory deviation: The calculated result is based on approved transitional-measures; any modification to the phase-out schedule must be flagged..^[3]
• Reporting: The displayed result is the canonical transitional-impact indicator for the SFCR and RSR annual and quarterly submissions..^[4]