Subject to Article 21 of these Regulations the minimum solvency margin shall be determined as shown below according to the classes of insurance underwritten:
(a) For the kinds of insurance referred to in Article 1(1) (a) and (b) of the Directive, other than assurance linked to investment funds, and for the operations referred to in Article 1(3) of the Directive, the solvency margin must be equal to the sum of the following two results:
- first result:
a 4% fraction of the mathematical reserves relating to direct business gross of reinsurance cessions and to reinsurance acceptances shall be multiplied by the ratio, for the last financial year, of the total mathematical reserves net of reinsurance cessions to the gross total mathematical reserves as specified above; that ratio may in no case be less than 85%;
- second result:
(i) for policies on which the capital at risk is not a negative figure, a 0.3% fraction of such capital underwritten by the undertaking shall be multiplied