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\,prem\,res}} = \sqrt{0.65 \cdot \sum_{\mathrm{s}} \mathrm{NL}_{(\mathrm{pr},\mathrm{s})}^2 + 0.35 \cdot \left(\sum_{\mathrm{s}} \mathrm{NL}_{(\mathrm{pr},\mathrm{s})}\right)^2}
,
where the s covers all segments set out in Annex II.
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:
V(prem,s) denotes the volume measure for premium risk of segment s calculated in accordance with paragraph 3 of Article 116;
V(res,s) denotes the volume measure for reserve risk of a segment calculated in accordance with paragraph 6 of Article 116.