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Stand:updated on 01.01.2016 | Topic Solvency Solvency I – Own funds and own funds requirements

Section 214 of the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG) lists own-fund items eligible for covering the Solvency Capital Requirement. The own funds of Pensionsfonds are governed by a German regulation.

Solvency Capital Requirement (SCR) and Minimum Capital Requirement (MCR)

Section 213 of the VAG stipulates that small insurance undertakings within the meaning of section 211 of the VAG and death benefit funds must at all times have available own funds in an amount equivalent to the SCR specified by a regulation pursuant to section 217 sentence 1 no. 1 of the VAG. The SCR for Pensionskassen is governed by a regulation pursuant to section 235 sentence 1 no. 1 of the VAG. Provisions on the financial adequacy of Pensionsfonds are contained in section 238 of the VAG; the respective regulation will be issued pursuant to section 240 sentence 1 no. 9 of the VAG.

One-third of the SCR constitutes the MCR.

Except for Pensionsfonds, the calculation and the level of the SCR as well as the minimum amount of the MCR applying to the individual lines of business are governed by the Capital Resources Regulation (Kapitalausstattungsverordnung – KapAusstV). The Regulation on the Supervision of Pensionsfonds (Pensionsfonds-Aufsichtsverordnung – PFAV) applies to Pensionsfonds.

The SCR for all lines of business except life insurance is calculated on the basis of the higher of two indices: the premium index (annual premiums) or the claims index (average claims expenses incurred during the last three financial years).
The SCR of life insurance business is primarily calculated based on the amount of the premium reserves and risk capital. On this basis, the SCR is calculated using a factor-based approach. The same applies to Pensionsfonds to the extent that they are guarantee schemes, which bear the risks themselves.

The Capital Resources Regulation also contains specific provisions for Pensionskassen and death benefit funds.

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