Regulatory Alerts2025-10-03
GFSC Guidance Note Solvency 2: The Internal Model Treatment of Participations
The Gibraltar Financial Services Commission issued this guidance to clarify expectations for insurance firms regarding the treatment of participations in insurance and reinsurance undertakings when determining the solo Solvency Capital Requirement using an approved internal model. The regulator requires firms to ensure their internal models reflect the economic reality of risks associated with these participations, including obstacles to transferring resources between entities and the justification for diversification effects. This document explicitly applies to solo SCR calculations and does not govern the calculation of group SCR, which already accounts for resource transfer restrictions.
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