Chapter II: Regulatory capital requirements

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R352-1R352-1-1

Article R352-1

French Insurance CodeIn force
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Updated 7 Nov 2023

For the purposes of this Chapter :

1° "Underwriting risk" means the risk of loss, or of adverse change in the value of insurance liabilities, resulting from inadequate pricing and reserving assumptions;

2° "Market risk" means the risk of loss, or of adverse change in the financial position, resulting directly or indirectly from fluctuations in the level and volatility of the market value of assets, liabilities and financial instruments;

3° "Credit risk" means the risk of loss, or of adverse change in the financial situation, resulting from fluctuations in the credit quality of issuers of securities, counterparties or any debtor, to which insurance and reinsurance undertakings are exposed in the form of counterparty risk, margin risk or concentration of market risk;

4° "Operational risk" means the risk of loss resulting from inadequate or failed internal procedures, staff or systems, or from external events;

5° "Liquidity risk" means the risk that insurance and reinsurance undertakings will not be able to realise their investments and other assets in order to meet their financial commitments when they fall due;

6° "Concentration risk" refers to all risk exposures with a loss potential large enough to threaten the solvency or financial position of insurance and reinsurance undertakings;

7° "Risk mitigation techniques" means all techniques which enable insurance and reinsurance undertakings to transfer all or part of their risks to another party;

8° "Diversification effects" means the reduction in risk exposure which results from insurance and reinsurance undertakings and groups diversifying their activities, where the adverse result of one risk can be offset by the more favourable result of another risk, where those risks are not perfectly correlated;

9° The term "probability distribution forecast" refers to a mathematical function that assigns a probability of occurrence to an exhaustive set of mutually exclusive future events;

10° "Risk measure" means a mathematical function which assigns a monetary amount to a given probability distribution and which increases monotonically with the level of exposure to the risk underlying that probability distribution.

Mariela Petrova

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Mariela Petrova

Mariela Petrova

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15+ Years In Corporate Practice

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