Where 88 is complied with, insurance and reinsurance undertakings may calculate the capital requirement for life disability-morbidity risk as follows:

where with respect to insurance and reinsurance policies with a positive capital at risk:

(a) CAR₁ denotes the total capital at risk, meaning the sum over all contracts of the higher of zero and the difference between the following amounts:

(i) the sum of:

- the amount that the insurance or reinsurance undertaking would currently pay in the event of the death or disability of the persons insured under the contract after deduction of the amounts recoverable from reinsurance contracts and special purpose vehicles;

- the expected present value of amounts not covered in the previous indent that the insurance or reinsurance undertaking would pay in the future in the event of the immediate death or disability of the persons insured under the contract after deduction of the amounts recoverable from reinsurance contracts and special purpose vehicles;

(ii) the best estimate of the corresponding obligations after deduction of the amounts recoverable form reinsurance contracts and special purpose vehicles;

(b) CAR₂ denotes the total capital at risk as defined in point (a) after 12 months;