The rule in plain words
Total before all diversification = total before diversification between risk modules - diversification within risk modules
The headline gives only the template and the kind of check, because the rule is too long to say in a headline. The plain words above say all of it.
This is a blocking check. A return that fails it is normally rejected, so fix it before you submit. It runs only when your filing indicators mark IR.25.04 as reported.
The cells it reads
Solvency capital requirement (IR.25.04.01.01)
Rows
- R0130Diversification within market risk
- R0170Diversification within counterparty default risk
- R0260Diversification within life underwriting risk
- R0310Diversification within health underwriting risk
- R0360Diversification within non-life underwriting risk
- R0432Total before all diversification
- R0434Total before diversification between risk modules
Column
- C0010c
Which returns it applies to
Line4 Check runs it on annual solo (ARS) return on Bank of England taxonomy 2.2.0. The Bank of England applies it to annual solo (ARS) returns, as a blocking check.
The Bank’s own words and formula
The plain words above are the Bank of England’s own, word for word, from its list of validations.
Show the formulaShowHide
The Bank of England's formula. Cells are written as {t: table, r: row, c: column}.
{t: IR.25.04.01.01, r: R0432, c: C0010} = {t: IR.25.04.01.01, r: R0434, c: C0010} - {t: IR.25.04.01.01, r: R0130, c: C0010} - {t: IR.25.04.01.01, r: R0170, c: C0010} - {t: IR.25.04.01.01, r: R0260, c: C0010} - {t: IR.25.04.01.01, r: R0310, c: C0010} - {t: IR.25.04.01.01, r: R0360, c: C0010}Other rules on Solvency capital requirement (IR.25.04)
- Solvency capital requirement: values must agree (IR_bv2012)Blocking
- Solvency capital requirement: market risk = sum of parts (IR_bv2039_01)Blocking
- Solvency capital requirement: market risk = sum of parts (IR_bv2039_02)Blocking
- Solvency capital requirement: counterparty risk = sum of parts (IR_bv2040_01)Blocking
- Solvency capital requirement: counterparty risk = sum of parts (IR_bv2040_02)Blocking
- Solvency capital requirement: life underwriting risk = sum of parts (IR_bv2041_01)Blocking
- Solvency capital requirement: life underwriting risk = sum of parts (IR_bv2041_02)Blocking
- Solvency capital requirement: health underwriting risk = sum of parts (IR_bv2042_01)Blocking
Every Solvency UK rule on IR.25.04
Checks like this one, run at the point of submission, are the first step to real-time supervision. Line4 builds SupTech software for financial regulators that runs checks like these as each return arrives.