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MCR Life Linear Component

Calculate the Life Linear Component instantly.

€
€
€
€
€

Life Best Estimate Leg

€8 120 000

+

Life Capital-at-Risk Leg

€840 000

=

Life Linear Component

€8 960 000

InputApplies toFactor
TP Life 1
Guaranteed benefits with profit participation
3.7%
TP Life 2
Future discretionary benefits
-5.2%
TP Life 3
Index-linked and unit-linked
0.7%
TP Life 4
Other life
2.1%
CAR
Capital at risk
0.07%
1Step 1

Floor each Article 251 technical-provision term at zero, then apply the factors.

BEleg=0.037TP1+−0.052TP2++0.007TP3++0.021TP4+BE_{leg}=0.037TP_1^{+}-0.052TP_2^{+}+0.007TP_3^{+}+0.021TP_4^{+}
2Step 2

Apply the capital-at-risk factor after the zero floor.

CARleg=0.0007CAR+CAR_{leg}=0.0007CAR^{+}
3Step 3

Add both legs.

MCRlinear,l=BEleg+CARlegMCR_{linear,l}=BE_{leg}+CAR_{leg}

Understand the MCR Life Linear Component

Overview

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

Input Terms

  • Technical Provisions (Net of Reinsurance): The value of life technical provisions calculated net of expected reinsurance recoverables.[1]
  • Net Amount at Risk (NAR): The total net amount at risk for life-benefit obligations, net of reinsurance.[1]
  • Line-of-Business (LoB) Factors: The regulatory factors (e.g., 0.07% to 3.7%) applied to the volume of each life insurance segment.[1]

Technical Rationale

Article 251 makes the life linear component volume-based because the absolute minimum capital floor for life business must scale with reported obligations and biometric risk exposure.[1]

Article 251 ties the life Linear MCR to technical provisions and net amount at risk because the minimum floor should reflect the undertaking's life obligation mix, not only its diversified SCR.[1] The life component forms part of the total Linear MCR before corridor and absolute-floor checks.

Important Notes

  • Combined MCR: The life linear component is added to the non-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 MCR component for the S.28.01.01 or S.28.02.01 reporting view, depending on undertaking scope.[3][4]

Sources

  1. Delegated Regulation (EU) 2015/35 - Art. 251 (Linear formula component for life insurance and reinsurance obligations) - EIOPA
  2. Directive 2009/138/EC - Art. 129 (Calculation of the Minimum Capital Requirement) - EIOPA
  3. Commission Implementing Regulation (EU) 2023/894 - QRT S.28.01.01 (Minimum Capital Requirement for life-only or non-life-only activity) - EUR-Lex
  4. Commission Implementing Regulation (EU) 2023/894 - QRT S.28.02.01 (Minimum Capital Requirement for both life and non-life activity) - EUR-Lex

Default values are illustrative sample inputs for navigation, training, and QA. Replace them with controlled data before using the result in capital analysis, governance, or reporting decisions.