3
Purpose
3.1
A capital assessment should reflect both a firm's business model and its commercial objectives and give the required level of confidence that a firm's liabilities to policyholders will be paid. A firm should consider, and be able to provide an explanation for, all material risks which may arise before the policyholder liabilities are settled based on a reasonable assumption of the expected likelihood of these risks crystallising.
- 20/11/2015
3.2
A capital assessment should demonstrate that a firm holds sufficient capital to be able to make any planned investments and take on new business (if it wishes to do so). It should also ensure that if a firm had to close to new business (if it has not already done so), it would be able to meet its existing commitments. Where possible, the reasonableness of the results should be supported by considering complementary evidence of the financial resources needed.
- 20/11/2015