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Recital 72

Recital 72

(72)The scenario-based calculations of the Solvency Capital Requirement standard formula are based on the impact of instantaneous stresses and insurance and reinsurance undertakings should not take into account risk-mitigation techniques that rely on insurance or reinsurance undertakings taking future action, such as dynamic hedging strategies or future management actions, at the time that the stress occurs. Dynamic hedging strategies and future management actions should be distinguished from rolling hedge arrangements, where a risk-mitigation technique is currently in force and will be replaced at the time of its expiry with a similar arrangement regardless of the solvency position of the undertaking.

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