R1

Question 1

R1 charge reflects

Answer 1

Interest rate and default risk from fixed income instruments

Question 2

Holding company RBC charge

Answer 2

0.225 * (Holding company value - carrying value of indirectly owned companies)

Question 3

Upstream affiliate RBC charge

Answer 3

0.225 * carrying value of bonds

Question 4

Insurance subsidiaries not subject to RBC

Answer 4

0.225 * book/ACV of bonds

Question 5

RBC charge for “Other Non-Insurance Subsidiaries”

Answer 5

0.225 * book/ACV of bonds

Question 6

RBC charge, investment affiliates

Answer 6

Same as if the parent owned the investments directly

Question 7

RBC charge, unaffiliated bonds

Answer 7

Factor * book/ACV of bonds

Question 8

Bond factor, Class 1 (guaranteed by US gov)

Answer 8

0

Question 9

Bond factor, US government bonds not guaranteed

Answer 9

0.003

Question 10

Bond factor, “Other Class 1”

Answer 10

0.003

Question 11

Bond factor, Class 2

Answer 11

0.01

Question 12

Bond factor, Class 3

Answer 12

0.02

Question 13

Bond factor, Class 4

Answer 13

0.045

Question 14

Bond factor, Class 5

Answer 14

0.1

Question 15

Bond factor, Class 6

Answer 15

0.3

Question 16

Bond size factor

Answer 16

Using non-US government bonds:
First 50 issuers, 250%
Next 50 issuers, 130%
Next 300 issuers, 100%
Rest, 90%

Factor = Weights/Issuers - 1

Question 17

RBC charge, mortgage loans

Answer 17

0.05 * book/ACV

Question 18

RBC charge, cash (and other short-term)

Answer 18

0.003 * book/ACV

Question 19

RBC charge, admitted collateral loans

Answer 19

0.05 * book/ACV

Question 20

RBC charge, RSAT

Answer 20

Factor of equivalent investment * annual statement value (from schedule DB); reduced by charge of component investment

Question 21

RBC charge, mandatory convertible securities

Answer 21

max(0, charge for converted security - charge for original security); 50% to R1, 50% to R2