PIN A8.9 PIN A8.9 Size factor component
PIN A8.9 Guidance
The effect of the size factor component is to provide a relatively higher capital requirement in respect of
Long-Term Insurance Fundswith smaller portfolios of Invested Assets. The provisions in this section apply the relevant provisions of PIN section A4.9 to each Long-Term Insurance Fundthat an Insurermaintains.
The base figure for the size factor component is determined by aggregating the following components, for the
Long-Term Insurance Fund:(a) the aggregate of the default components determined in accordance with PIN section A8.4, in respect of Invested Assets;(b) the investment volatility risk component determined in accordance with PIN section A8.5; and(c) the concentration risk component determined in accordance with PIN section A8.8.
Insurermust calculate the size factor component in respect of Long-Term Insurance Fundby multiplying the base figure for that fund as determined in accordance with PIN Rule A8.9.1 by the factor derived by applying the following formula, where x represents the total Invested Assetsattributable to that fund, expressed in millions of dollars:(a) if x ≤ 100, the factor is 1.5;(b) if 100 < x ≤ 200, the factor is (150 + 0.5(x–100))/x;(c) if 200 < x ≤ 1,200, the factor is (200 – 0.2(x–200))/x; and(d) if x > 1,200, the factor is zero.