RBC charge for bond investment in a parent company.

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RBC charge for bond investment in a parent company.

RBC charges are determined by applying a fixed risk factor to the asset’s carrying value, so the size of the charge scales with the amount the company actually carries on its books. For a bond investment in a parent company, the appropriate factor is 0.225, meaning the charge equals 0.225 times the carrying value of the bonds. The carrying value is the regulatory base used in RBC calculations (it reflects amortization and impairment), whereas book value or adjusted carrying value aren’t the bases for this specific category. Therefore, the correct computation is 0.225 × Carrying Value of Bonds.

RBC charges are determined by applying a fixed risk factor to the asset’s carrying value, so the size of the charge scales with the amount the company actually carries on its books. For a bond investment in a parent company, the appropriate factor is 0.225, meaning the charge equals 0.225 times the carrying value of the bonds. The carrying value is the regulatory base used in RBC calculations (it reflects amortization and impairment), whereas book value or adjusted carrying value aren’t the bases for this specific category. Therefore, the correct computation is 0.225 × Carrying Value of Bonds.

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