Operational risk

1. The capital requirement for the operational risk module shall be equal to the following:

SCR Operational= min(0,3*BSCR; Op) + 0,25 * Exp ul

where:

(a) BSCR denotes the Basic Solvency Capital Requirement;

(b) Op denotes the basic capital requirement for operational risk charge;

(c) Exp ul denotes the amount of expenses incurred during the previous 12 months in respect of life insurance contracts where the investment risk is borne by policy holders.

2. The basic capital requirement for operational risk shall be calculated as follows:

Op=max(Op premiums; Op provisions)

where:

(a) Op premiums denotes the capital requirement for operational risks based on earned premiums;

(b) Op provisions denotes the capital requirement for operational risks based on technical provisions.

3. The capital requirement for operational risks based on earned premiums shall be calculated as follows:

Op premiums={ 0,04*(Earn life - Earn life-ul)+ 0,03* Earn non-life + max(0;0,04*(Earn life-1,2*pEarn life -(Earn life-ul) - 1,2*pEarn life-ul)))+max(0;0,03*(Earn non-life -1,2*pEarn non-life))

where:

(a) Earn life denotes the premiums earned during the last 12 months for life insurance and reinsurance obligations, without deducting premiums for reinsurance contracts;

(b) Earn life-ul denotes the premiums earned during the last 12 months for life insurance and reinsurance obligations where the investment risk is borne by the policy holders without deducting premiums for reinsurance contracts;

(c) Earn non-life denotes the premiums earned during the last 12 months for non-life insurance and reinsurance obligations, without deducting premiums for reinsurance contracts;

(d) pEarn life denotes the premiums earned during the 12 months prior to the last 12 months for life insurance and reinsurance obligations, without deducting premiums for reinsurance contracts;

(e) pEarn life-ul denotes the premiums earned during the 12 months prior to the last 12 months for life insurance and reinsurance obligations where the investment risk is borne by the policy holders without deducting premiums for reinsurance contracts;

(f) pEarn non-life denotes the premium earned during the 12 months prior to the last 12 months for non-life insurance and reinsurance obligations, without deducting premiums for reinsurance contracts.

For the purposes of this paragraph, earned premiums shall be gross, without deduction of premiums for reinsurance contracts.

4. The capital requirement for operational risk based on technical provisions shall be calculated as follows:

Op provisione=0,0045*max(0;TP life - TP life-ul) + 0,03(0;TP non-life)

where:

Op provisions=0,0045*max(0; TP life - TP life-ul) + 0,03*max(0;TP non-life)

where:

(a) TP life denotes the technical provisions for life insurance and reinsurance obligations;

(b) TP life-ul denotes the technical provisions for life insurance obligations where the investment risk is borne by the policy holders;

(c) TP non-life denotes the technical provisions for non-life insurance and reinsurance obligations.

For the purposes of this paragraph, technical provisions shall not include the risk margin, and shall be calculated without deduction of recoverables from reinsurance contracts and special purpose vehicles.