1.Insurance and reinsurance undertakings shall only use the prudent deterministic valuation of the best estimate for life obligations with options and guarantees that are not deemed material, as referred to in Article 77(8) of Directive 2009/138/EC, where all of the following conditions are met:
the insurance or reinsurance undertaking clearly identifies the life obligations with options and guarantees which it deems immaterial and to which it intends to apply the prudent deterministic valuation of the best estimate;
the time value of options and guarantees of the life obligations referred to in point (a) represents less than 5 % of the Solvency Capital Requirement;
the insurance or reinsurance undertaking confirms in writing that it intends to apply the calculation methodology referred to in paragraph 2 to the life obligations referred to in point (a) of this paragraph;
the undertaking is classified as small and non-complex undertaking.
For the purposes of the first subparagraph, point (b), insurance and reinsurance undertakings shall use the most recent set of scenarios that are laid down and published by EIOPA in accordance with Article 77e(1), point (ab), of Directive 2009/138/EC.
2.Where insurance and reinsurance undertakings use the prudent deterministic valuation of the best estimate for clearly identified life obligations with options and guarantees that are deemed immaterial, in accordance with paragraph 1, they shall value the best estimate of such obligations as the sum of the following:
the deterministic best estimate of the life obligations with options and guarantees that are deemed immaterial;
the product of a stochastic add-on and the Solvency Capital Requirement of the undertaking.
For the purposes of the first subparagraph, point (b), the stochastic add-on shall be equal to 5 %, unless the undertaking demonstrates to the satisfaction of the supervisory authority that another percentage would more appropriately reflect its risk profile. For the purposes of that demonstration, the insurance and reinsurance undertaking shall use the set of scenarios referred to in paragraph 1, second subparagraph.
3.Insurance and reinsurance undertakings that use the prudent deterministic valuation of the best estimate for clearly identified life obligations with options and guarantees that are deemed immaterial shall assume that the stochastic add-on referred to in paragraph 2, first subparagraph, point (b), is constant for calculating the Solvency Capital Requirement, including the loss-absorbing capacity of technical provisions referred to in Article 206.