Abstract
We examine the ingredients of Solvency II, namely its free capital, provision and solvency capital requirement. They are of course linked by the accounting equality but we claim that they should be more deeply related to each other since solvency naturally should require positivity of available capital. Taken in general, this condition indeed almost dictates a formula to derive provision from free capital. The derivation suggests the property of market consistency of provision and the definition of optimal replicating portfolio. This does not show up in actual building of Solvency II, while we show that coherent risk measures allow an integrated construction.
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