Where Article 88 is complied with, insurance or reinsurance undertakings may calculate the risk-mitigating effect on underwriting risk j of a proportional reinsurance arrangement for counterparty i referred to Article 196 as follows:
\frac{\mathrm{Recoverables}_i}{\mathrm{BE} - \mathrm{Recoverables}_{\mathrm{all}}} \cdot \mathrm{SCR}_j
where
(a)((a)) BE denotes the best estimate of obligations gross of the amounts recoverable,
(b)((b)) Recoverables_{i} denotes the best estimate of amounts recoverable from the proportional reinsurance arrangement and the corresponding debtors for counterparty i,
(c)((c)) Recoverables_{all} denotes the best estimate of amounts recoverable from the proportional reinsurance arrangements and the corresponding debtors for all counterparties
(d)((d)) SCR_{j} denotes the capital requirements for underwriting risk j of the insurance or reinsurance undertaking.