Floor of own funds under Solvency II, whose breach triggers withdrawal of authorization, computed within a corridor of 25% to 45% of SCR and bounded by absolute amounts.
SCR and MCR are not two versions of the same threshold, they trigger two different regimes. Falling below SCR opens a recovery procedure: the undertaking files a plan, has several months, and keeps trading. Falling below MCR is a terminal event: the supervisor demands a very short-term finance scheme and, absent execution, withdraws authorization. MCR is computed through a simple linear formula on technical provisions and premiums, deliberately crude so as to be incontestable, then bounded by a corridor of 25% to 45% of SCR: it can neither fall below a quarter of it nor exceed 45%. An absolute floor in euros is added, differentiated between life, non-life and reinsurance undertakings, to stop a tiny structure from operating with no meaningful own funds. That ratchet is why steering is done on the SCR ratio and never on the MCR ratio: by the time the latter becomes the binding constraint, the game is over.
European non-life insurer as of December 31, 2025. SCR 480M EUR, linear MCR computed at 96M EUR, exactly the 25% floor of the corridor, which therefore becomes the retained MCR. Eligible own funds 826M EUR: SCR coverage ratio 172%, MCR coverage ratio 860%. The second figure, spectacular as it is, carries no steering value and appears in the report only because the regulation requires it.
MCR, minimum de capital requis, seuil de retrait d'agrément, minimum capital requirement