Methodology for measuring insurer’s capital

The Bank of Russia has approved the methodology for measuring an insurer’s capital (excluding mutual insurance companies). The capital of an insurance company was defined earlier as the sum of additional Tier 1 capital, reserve capital and retained profit.

The methodology for measuring capital proceeds from the calculation of the actual solvency margin amount. This calculation is based on the provisions of the EU directive Solvency I. The said amendments envisage, inter alia, the decrease in insurer’s capital by a number of assets, which includes subordinated instruments of credit institutions, if liabilities on them arose after the methodology for measuring capital became effective. To harmonise insurance regulation, the respective amendments are simultaneously made to the procedure for investing insurer’s capital.

The following documents: Bank of Russia Ordinance No. 4896-U, dated 3 September 2018, ‘On the Methodology for Measuring Insurer’s Capital (Excluding Mutual Insurance Companies)’ and Bank of Russia Ordinance No. 4897-U, dated 3 September 2018, ‘On Amending Bank of Russia Ordinance No. 4298-U, Dated 22 February 2017, ‘On the Procedure for Investing Insurer’s Capital and the List of Assets Eligible for Investment’ are published on the Bank of Russia website and become effective 10 days thereafter.

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