We read your acronym "OFS" as Other Financial Sectors and we understand your question as referring to undertakings regulated by other relevant financial sector rules.
When calculating the consolidated group SCR, regulated undertakings from OFS are contributing with the proportional share of the capital requirements calculated according to their relevant sectoral rules as referred to in Article 336 (c) of the Delegated Regulation (DR). When applying the algorithm outlined under Article 336 DR, you apply a simple summation and add the capital requirements as calculated under the relevant financial sector for those regulated undertakings. This means that regulated undertakings from OFS are not part of the Diversified SCR (Article 336(a) DR) for which you apply the various SCR risk modules, including, where relevant, the market risk module and the counterparty default risk module. It is important to note that the related OFS are excluded from the risk calculation in Article 336(a) DR, this as OFS are not included in the Solvency II consolidated data on the same basis as undertakings that fall under Article 335(1)(a),(b) and (c) DR, but on the basis described under Article 335(1)(e) DR.
Based on this, and to be direct to your own question, when you deal with a regulated OFS undertaking under Method 1, you expect that the risks of such undertaking are covered by their own sectoral rules and no additional calculations are required under Solvency II.
It should also be noted that if the case refers to a simple investment in OFS (not considered as regulated undertaking), then such situation should be treated as an equity investment for the purpose of calculating the Group SCR and, more specifically, in the calculation of the consolidated group SCR according to art 336(a) of the DR.