Q&A 2635  clarifies that aggregate limits, can only be considered in scenario-based modules, i.e. the Non-Life Cat module in our context. Is the capital requirement for catastrophe risk based on the maximum possible deterioration of losses under the contracts, which is equal to [Annual Aggregate Limit (AAL) – Best estimate (BE) loss ratio], as opposed to computing the capital requirement based on the full AAL irrespective of the BE loss ratio? As an example, if the BE loss ratio is 75%, and the risk mitigation contract limits the net exposure of the company to a maximum possible loss ratio of 80% in the annual aggregate, then the capital charge to be considered in catastrophe risk, after cession to the reinsurer, should in our view be a 5% deterioration in loss ratio [= 80% AAL – 75% reflected in the BE loss ratio]. This would be a consistent application of the features of the contract and, to our understanding, seems also consistent with your answer to Q&A 1316. Likewise then, if the BE loss ratio yields EUR 4m of expected losses, and the inward contract limits the exposure of the company to a maximum possible loss of EUR 10m in the annual aggregate, then the capital charge to be considered in catastrophe risk should be EUR 6m [= EUR 10m AAL – EUR 4m losses already reflected in the BE loss ratio] to be consistent with the features of the contract.