Twin Peaks approach for IPSB

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‘twin peaks ’ approach for with--profits business,

Thislinks provisioning and capital requirements more directly to how bonus payments are made to policyholders in practice.

The twin peaks approach provides a useful benchmark for the assessment of financial resources required to support with-profits business and a degree of standardisation between firms.

This CP also provides greater detail on how the individual capital adequacy framework (ICAS)will apply to life firms.

The framework requires a firm to self-assess capital appropriate to its individual risk profile,as a complement to the minimum capital requirements for with-profits business (in the twin peaks approach)and other life business.

The CP also covers the change of approach to the definition of capital in the PSB (Chapter 6)and feedback to the responses the FSAreceived on CP143 1 .