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Insurer capital and parent remittances

Follow subsidiary capital and claims-paying cash through a permitted remittance to the parent dividend decision.

Part 9; Appendix 03 §A3.2. New fictional one-subsidiary example; not Jubilee solvency or IFRS 17 valuation. Inputs are illustrative assumptions, not live prices or investment recommendations.

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Scenario and units

Scenario / evidence label:

Currency:

Amount and share-count scale:Use the same scale for money and share counts. Money divided by shares then gives currency per share.

Period / valuation date:

Regulated subsidiary capital and cash

Subsidiary eligible capital before the new stress:

Subsidiary required capital amount:

Additional subsidiary capital buffer:

Additional stress loss reducing eligible capital:

Subsidiary cash available after restrictions and ordinary claims:

Additional cash claims / expenses not in that available cash:

Permitted subsidiary remittance ceiling:

Parent cash and proposed distribution

Opening unrestricted parent cash:

Parent obligations due over the chosen horizon:

Parent reserve to retain:

Parent legal / supervisory distribution ceiling:

Proposed parent dividend at the horizon:

Timing and explicit bridge financing

Decision horizon (days from opening):

Day the permitted remittance arrives:

Day parent obligations are paid:

Explicit bridge borrowing received at opening:Repaid in full at the decision horizon. This is financing, not earnings.

Total bridge interest and fees paid at horizon:

Restore teaching example

Amber fields are editable. Missing required inputs are not treated as zero. Inputs are used for this response and are not stored in a profile or lead list.

Your scenario, step by step.

Fictional teaching case · Illustrative annual period. Currency: KES; money and shares: million. Prices and per-share results use whole currency units per share. Percentage columns show percentages; discount factors are unitless.

Remittance received within horizon12

Unfunded reserve shortfall before dividend3

Parent distribution capacity0

Dated parent cash before the proposed dividend

Day	Net cash movement	Closing cash	Above retained reserve
0	3	3	1
60	-4	-1	-3
90	12	11	9

Remittance timing and explicit financing

Measure	Value
Remittance within horizon	12
Bridge received at opening	0
Bridge principal repaid at horizon	0
Bridge interest and fees	0
Unfunded reserve shortfall before dividend	3
Proposed dividend above capacity	5

Subsidiary capital, liquidity and parent cash

Measure	Value
Eligible subsidiary capital	100
Incremental capital stress loss	-5
Required capital	-70
Additional capital buffer	-10
Capital headroom	15
Cash after additional claims	25
Permitted remittance ceiling	12
Remittance capacity	12
Parent opening unrestricted cash	3
Parent obligations	-4
Parent retained reserve	-2
Conditional horizon headroom before dividend	9
Parent distribution ceiling	50
Distribution capacity	0
Proposed parent dividend	5
Cash headroom after proposed dividend	4

Interpret the result.

This is one fictional regulated subsidiary and its parent. Group profit, premium receipts and reported dividends are not inputs for freely available parent cash.

Required capital, permitted transfers and cash restrictions must come from the correct entity and period. This is not an IFRS 17 engine or a statutory solvency calculation.

Capital losses and cash claims are different constraints. Enter only incremental losses and payments not already reflected in the respective starting balances.

Events on the same day are netted; intraday settlement order is not modeled. Bridge borrowing arrives at opening and is repaid in full, with the entered cost, at the horizon.

The proposed dividend is tested at the horizon. An earlier reserve breach blocks distribution capacity until funding or payment timing is explicitly resolved. Conditional closing cash alone does not settle an earlier missed payment.

Formulae and symbol definitions.

H_s=C_s-L_s-K_s-B_s,\qquad Q_s=Q_0-X_s

Subsidiary capital headroom deducts losses, required capital and buffer. Available subsidiary cash deducts additional claims from reviewed cash.

R_s=\max(0,\min(H_s,Q_s,U_s))

Remittance cannot exceed subsidiary capital headroom, cash or the permitted remittance ceiling.

\[ H_p=C_p+R_h-O_p-B_p-F_b \]

Conditional horizon headroom adds only remittances received by that date and deducts parent obligations, reserves and bridge cost. Bridge principal arrives at opening and is repaid at horizon.

D_{\max}=\max(0,\min(H_p,J_p))

This capacity applies only if the dated cash path never breaches the reserve; otherwise capacity is zero until the gap is resolved.

Symbol	Definition and units
$$C_s,L_s,K_s,B_s$$ Cs, Ls, Ks, Bs	Subsidiary eligible capital, incremental loss, required capital and extra buffer.
$$H_s$$ Hs	Subsidiary capital headroom after stress.
$$Q_0,X_s,Q_s$$ Q0, Xs, Qs	Reviewed subsidiary available cash, additional claims/expenses and remaining cash.
$$R_s,U_s$$ Rs, Us	Calculated remittance capacity and permitted remittance ceiling.
$$R_h,F_b$$ Rh, Fb	Remittance actually received within the horizon and explicit bridge interest/fees.
$$C_p,O_p,B_p$$ Cp, Op, Bp	Parent unrestricted cash, obligations and cash reserve to retain.
$$H_p,J_p$$ Hp, Jp	Parent cash headroom and separate distribution ceiling.
$D_{\max}$ Maximum distribution	Parent distribution capacity under the entered constraints, not group profit.

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Method background: Berkshire Hathaway’s 1986 owner-earnings discussion. Filings require accounting interpretation; these tools do not fetch SEC or NSE data automatically.

Symbol	Definition and units
$\(C_s,L_s,K_s,B_s\)$ Cs, Ls, Ks, Bs	Subsidiary eligible capital, incremental loss, required capital and extra buffer.
$\(H_s\)$ Hs	Subsidiary capital headroom after stress.
$\(Q_0,X_s,Q_s\)$ Q0, Xs, Qs	Reviewed subsidiary available cash, additional claims/expenses and remaining cash.
$\(R_s,U_s\)$ Rs, Us	Calculated remittance capacity and permitted remittance ceiling.
$\(R_h,F_b\)$ Rh, Fb	Remittance actually received within the horizon and explicit bridge interest/fees.
$\(C_p,O_p,B_p\)$ Cp, Op, Bp	Parent unrestricted cash, obligations and cash reserve to retain.
$\(H_p,J_p\)$ Hp, Jp	Parent cash headroom and separate distribution ceiling.
$D_{\max}$ Maximum distribution	Parent distribution capacity under the entered constraints, not group profit.