Suppose that: (i) insurance undertaking A owns a participation in a related undertaking D, which is a bank that is strategic for A and is included in the calculation of the group solvency on the basis of method 1 as set out in Annex I to Directive 2002/87/EC. (ii) the value of the participation D is not deducted (due to Article 68(3) of Delegated Regulation). The explanatory text of Guideline 8, from “Guidelines on treatment of related undertakings, including participations” clarifies that when calculating the SCR using the standard formula, investments in related undertakings which are not deducted (including strategic participations in financial and credit institutions) are subject to standard formula charges as they apply to all other equity investments. Nevertheless, the explanatory text of these Guidelines – namely Case 2 of Guideline 8 and Chart 1 of Appendix C – only equity risk is explicitly considered and concentration risk is not referred. Question: When calculating the SCR with the standard formula, A has to apply the equity risk charge of 22% to the value of its holding of D’s ordinary shares. Should concentration risk be applied as well?