1. 1. Where Articles 88 and 89 are complied with, captive insurance and captive reinsurance undertakings may calculate the capital requirement for non-life premium and reserve risk as follows:
\(\mathrm{SCR}_{\mathrm{nl}\,\mathrm{prem}\,\mathrm{res}}$$\mathrm{SCR}_{\mathrm{nl\,prem\,res}} = \sqrt{0.65 \cdot \sum_{s}\sum_{\mathrm{s}} \mathrm{NL}_{(\mathrm{pr},s)}^{2}\mathrm{NL}_{(\mathrm{pr},\mathrm{s})}^2 + 0.35 \cdot \left(\sum_{s}\left(\sum_{\mathrm{s}} \mathrm{NL}_{(\mathrm{pr},s)}\right)^{2}}\),\mathrm{NL}_{(\mathrm{pr},\mathrm{s})}\right)^2}$$
,
where the s covers all segments set out in Annex II.
2. 2. For the purposes of paragraph 1, the capital requirement for non-life premium and reserve risk of a particular segment s set out in Annex II shall be equal to the following:
\mathrm{NL}_{\mathrm{pr,s}} = 0.6 \cdot \sqrt{\mathrm{V}_{(\mathrm{prem,s})}^2 + \mathrm{V}_{(\mathrm{prem,s})} \cdot \mathrm{V}_{(\mathrm{res,s})} + \mathrm{V}_{(\mathrm{res,s})}^2}
where:
(a)((a)) V(prem,s)denotesV_{(prem,s)} denotes the volume measure for premium risk of segmentscalculatedsegment s calculated in accordance with paragraph 3 of Article 116;
(b)((b)) V(res,s)denotesV_{(res,s)} denotes the volume measure for reserve risk of a segment calculated in accordance with paragraph 6 of Article 116.