Question ID: 45
Regulation Reference: Guidelines on submission of information to NCAs (Preparatory phase)
Article: 35, 98
Template: S.23.01
Status: Final
Date of submission: 27 Mar 2014
Question
Please, could you verify the formulae in cells D51 (template OF-B1Q LOG-S.23.01.a.b) and D51A (template OF-B1Q-L-S.23.01.f.g) ?
Cell D51 (or mutatis mutandis D51A) refers to "Total eligible own funds to meet the MCR – tier 2". The formulae stated in that cell is: D51=MAX(0,(MIN(0.2*A53,((C46)-C51)+ (D46))))
Take a look at input D46 ("Total available own funds to meet the SCR"). This amount is made up of Basic-Own-Funds plus Ancillary-Own-Funds. If we go back to cell D51, it means you are using Ancillary-Own-Funds as eligible own funds to meet the MCR.
According to Article 98 (paragraph 4) of Directive 2009/138/EC (Solvency II), ancillary own funds do not seem to be eligible to meet the MCR.
Please, Can you confirm if my interpretation is correct? If so, the formula for cell D51 should be:
D51=MAX(0,(MIN(0.2*A53,C46-C51+D47)))
Same line of reasoning applies to D51A, mutatis mutandis.
Also, for the sake of simplicity, would you mind removing unnecessary brackets?
EIOPA answer
The formula included in the LOG file in cell D51 is in fact incorrect.
The correct formula should be: D51=MAX(0,MIN(0.2*A53,(C47-C51+D47))), i.e. excluding Ancillary Own Funds as the cell D47 excludes them.
In the S.23.01.f.g. the correct formula of D51A should be: D51A=MAX(0,MIN(0.2*A53A,(C48-C51A+D48)))