A different arrangement of the same arithmetic is not a wrong answer. What matters is that the margin never entered it.
1 · Target capital
Target capital is the standalone capitals aggregated with the diversification effect — and nothing else:
| A | B | C | |
|---|---|---|---|
| Non-life insurance risk | 420 | 310 | 640 |
| Market risk | 260 | 180 | 520 |
| Credit risk | 55 | 40 | 95 |
| Diversification | −180 | −130 | −300 |
| Target capital | 555 | 400 | 955 |
2 · The ratio
A: 890 / 555 = 1.6036 → 160.4%
B: 380 / 400 = 0.9500 → 95.0%
C: 290 / 955 = 0.3037 → 30.4%
3 · The bands
| Ratio | Band | Consequence | |
|---|---|---|---|
| A | 160.4% | 🟢 green | Normal supervision — but a payout that would drop it out of green still needs approval (Art. 52). |
| B | 95.0% | 🟡 yellow | FINMA may apply any protective measure; a measures plan is required. |
| C | 30.4% | 🔴 red | Below 33%. Absent immediate, visibly effective measures: no new contracts, and wind-up. |
4 · The distractor
The market value margin row. Under the current ordinance it is a liability on the SST balance sheet — the Mindestbetrag of Art. 30 §4 — so it is already deducted inside the risk-bearing capital figures you were given, and it is not part of target capital. Adding it anywhere would double-count it.
What to notice
B is the interesting one. At 95% the company is not in crisis — it is 5% short of a threshold — but legally it sits in the same band as a company at 40%. The band is coarse on purpose: it defines what FINMA may do, and the proportionality is left to judgement. A company at 95% will be asked for a plan; a company at 40% will be asked much more.
And C shows why the denominator matters as much as the numerator. C is not conspicuously under-capitalised in absolute terms — it holds CHF 290m — but it is running a very large book against it. The SST ratio is a statement about the relationship, never about the size.