Which statement describes the RBC charge for an indirectly owned alien affiliate?

• A. Carrying value x 0.5
• B. Book/ adjusted carrying value x 0.5
• C. 0.5 x affiliate RBC
• D. Affiliate RBC x 0.5

Answer: (A)

For an indirectly owned alien affiliate, the RBC charge is 50% of the carrying value of the investment in that affiliate as it sits on the parent company’s balance sheet. This means you take what the parent already records as the investment’s value (carrying value) and apply a 0.5 multiplier. The charge reflects the partial risk the parent bears from that investment without using the affiliate’s own RBC or any adjusted/book value figures. For example, if the carrying value is 100, the RBC charge would be 50. Using the affiliate’s RBC or an adjusted carrying value would mix in other quantities not used for this calculation, which is why the correct form is carrying value times 0.5.