Corporation Tax Act 2010 section 269ZM

Meaning of "solvency shock period"

Section 269ZM defines what constitutes a "solvency shock period" for an insurance company, being a 12-month period in which the company's solvency loss exceeds its shock loss threshold.

• A solvency shock period is any 12-month period in which an insurance company's solvency loss exceeds its shock loss threshold.
• The threshold is breached when the reduction in the company's basic own funds exceeds 90% of its solvency capital requirement, representing a 1-in-100-year loss event.
• Both the movement in basic own funds and the solvency capital requirement are subject to specific adjustments to ensure the comparison is made on a like-for-like basis.
• These adjustments are designed to prevent less severe loss events from incorrectly exceeding the shock loss threshold.