Comments on: The Equity Symmetric Adjustment: Dispelling Myths and Understanding Market Dynamics https://twentythirdfloor.co.za/2024/09/25/the-equity-symmetric-adjustment-dispelling-myths-and-understanding-market-dynamics/ Perspectives Wed, 05 Mar 2025 13:54:27 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: David Kirk https://twentythirdfloor.co.za/2024/09/25/the-equity-symmetric-adjustment-dispelling-myths-and-understanding-market-dynamics/comment-page-1/#comment-85097 Wed, 05 Mar 2025 13:54:27 +0000 https://twentythirdfloor.co.za/?p=3049#comment-85097 s a key clarification. I was focussed on the times when the SCR is reduced, but the adjustment can be positive or negative.]]> In reply to Anonymous.

That’s a key clarification. I was focussed on the times when the SCR is reduced, but the adjustment can be positive or negative.

]]> By: Anonymous https://twentythirdfloor.co.za/2024/09/25/the-equity-symmetric-adjustment-dispelling-myths-and-understanding-market-dynamics/comment-page-1/#comment-85096 Wed, 05 Mar 2025 13:41:59 +0000 https://twentythirdfloor.co.za/?p=3049#comment-85096 Hi

Thanks for this article.

The first sentence of the ‘Does the ESA increase or decrease risk?’ section is: “The application of the ESA results in insurers holding less capital than would be required by a strict 1-in-200 calibration.”

In the case where the ESA is positive, would the capital requirement for equity risk not be higher than would be required by a strict 1-in-200 calibration? (This is assuming that the pre-ESA equity stress is in fact a strict 1-in-200 calibration). I appreciate that the focus of this particular section is on risk (systemic and specific) during market downturns (which is made clear in the second paragraph of the section).

If this is the case (i.e. that a positive ESA would result in a higher than 1-in-200 capital requirement), I was wondering what your views on this are?

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