Prudential Regulation Authority Rulebook

6.1

This Chapter applies to the Society.

6.2

The Society must ensure that eligible own funds are held at Lloyd’s covering its SCR.

6.3

Eligible own funds covering the central requirement must be eligible own funds attributable to the Society.

6.4

Where the standard formula is used by the Society to calculate the SCR for Lloyd’s, the Society must carry out the following process before it will be taken to have demonstrated that 6.2 is met:

1. (1) own funds attributable to a member are to be compared with the member’s notional SCR derived pursuant to 8.4;
2. (2) where the own funds attributable to the member are less than or equal to that member’s notional SCR, such own funds (but no additional own funds attributable to that member, including any own funds which are greater than the member’s notional SCR) are to be taken into account for the purposes of establishing compliance with 6.2; and
3. (3) to the extent the own funds attributable to the member are less than that member’s notional SCR derived pursuant to 8.4, the Society must hold own funds in respect of the difference.

6.5

Where the Society uses an approved internal model, the Society must also ensure that eligible own funds are held at Lloyd’s covering, for at least 99.5% of the scenarios taken into account in the internal model for the purposes of meeting Solvency Capital Requirement - Internal Models 12.2, any diminution in own funds at Lloyd’s arising from the impact of those scenarios.

6.6

Where an approved internal model is used by the Society to calculate the SCR, for the purpose of meeting the requirement set out in 6.2, the Society may take account of own funds attributable to a member only to the extent of the diminution, if any, to those own funds resulting from the application of risk scenarios taken into account in the internal model.