Key takeaways

  • Equity risk is a significant driver of Market SCR across global insurance markets: managing it effectively is critical under evolving regulatory regimes such as Risk-Based Capital (RBC) and Solvency II.

  • Option-based targeted equity SCR strategies provide a structured way to balance protection cost, return potential and solvency impact, keeping equity SCR within a defined range. 

  • Risk mitigation effects are increasingly recognised by regulators, allowing insurers to reflect the impact of these strategies in their SCR calculations and improve capital efficiency. 

  • Implementation must be context-specific: parameters such as strike levels, maturities and hedge ratios are interdependent and must be carefully calibrated to portfolio, market and regulatory conditions. 

  • Real-world applications show measurable impact, with improved return-to-risk ratios, smoother solvency outcomes and more efficient capital use.

  • A proactive approach to equity SCR management supports long-term resilience, enabling insurers to stay invested and unlock capital for future growth. 

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