We're gonna forecast the capital requirement and own funds for Generali. And to do that, we're gonna use these assumptions here as well as the forecast balance sheets that we've prepared. Now, in terms of the assumptions, the first one that we've got here is a really important assumption, and that's the target solvency ratio. So the target level of own funds relative to the solvency capital requirement. And you can see that that target ratio of 200% is well in excess of the 100% regulatory minimum. Now below that, we've got the assumptions for each of the components of our capital requirement starting off with the financial and credit risk component. And that set as a percentage of the total assets excluding intangible assets. So we're gonna use the total assets in our forecast balance sheet, but we're gonna exclude the intangible assets and we'll include within that the DAC asset. Next we have the component for the underwriting risk and that's set as a percentage of our net insurance provisions. So we're gonna use our forecast insurance provisions for the life P&C business, but we're gonna deduct from that the reinsurance assets, 'cause those reinsurance assets help to reduce underwriting risk. Now, the final component is the diversification and other adjustments, and that's just given as an amount. And you can see here that the forecast numbers are consistent with the prior year number, and that's because we're assuming that there's no major changes to the insurance business during our forecast period. So let's go down and start to calculate our forecast capital requirements. And you can see we've got the prior numbers for comparison showing the allocation between the different components and how that adds up to the total solvency capital requirement. So let's start off with the financial and credit risk component. We'll take our assumption of 4.3% and we're gonna apply that to the total assets in our balance sheet.

And we're gonna deduct from that our intangible assets and our DAC assets.

So that gives our forecast financial and credit risk component. And now we'll calculate the underwriting risk component. So we'll take our 2.1% and we're gonna apply that to our total insurance provisions. So that's the life insurance provisions from our forecast balance sheet, and then our P&C insurance provisions from our forecast balance sheets. And then we'll deduct from that the reinsurance assets for both our life and also the P&C business.

So that gives our underwriting risk component. And then the last component, very straightforward, we just take the amount from our assumptions for our diversification adjustment. Now we can add all of those together and that gives us our total solvency capital requirement. Now, if we roll those forward, that gives us our forecast solvency capital requirement throughout our whole forecast period. And we can now use that to calculate our forecast of own funds.

So to do that, we're gonna take our target solvency ratio and apply that to our forecast solvency capital requirement. And again, we can roll that forward to the end of our forecast period. And we've now also forecast Generali's own funds.