FSA outlines capital adequacy regime for insurers

Firms with with-profits liabilities greater than £500m would be required to hold capital reserves based on the higher of a "regulatory peak" or a "realistic peak". Smaller firms would be free to opt for the twin peaks approach, but are not required to under the rules. If they chose the latter, the mathematical reserves would continue to be calculated according to the "net premium rule", as under current Interim Prudential Sourcebook: Insurers (IPRU) requirements. The twin peaks method means firms must under the regulatory peak: represent a prudent actuarial assessment of the fin...