#### § 217.606 Scaling parameters.

(a) *Scaling specified by the Board* —

(1) *Scaling between the U.S. Federal banking capital rules and NAIC RBC* —

(i) *Scaling capital requirement.* When calculating the building block capital requirement for a building block parent in accordance with [§ 217.607](/on/2024-09-19/title-12/section-217.607), where the indicated capital framework is NAIC RBC or the U.S. Federal banking capital rules, and where the indicated capital framework of the appropriate downstream building block parent is NAIC RBC or the U.S. Federal banking capital rules, the capital requirement scaling modifier is provided by table 1 to this [paragraph (a)(1)(i)](/on/2024-09-19/title-12/section-217.606#p-217.606(a)(1)(i)).

Table 1 to Paragraph (a)(1)(i)—Capital Requirement Scaling Modifiers for NAIC RBC and the U.S. Federal Banking Capital Rules

| | Upstream building block parent's indicated capital framework: | |
| --- | --- | --- |
| NAIC RBC | U.S. Federal banking capital rules |
| Downstream building block parent's indicated capital framework: | | |
| U.S. Federal banking capital rules | 0.0106 | 1 |
| NAIC RBC | 1 | 94.3 |

(ii) *Scaling available capital.* When calculating the building block available capital for a building block parent in accordance with [§ 217.608](/on/2024-09-19/title-12/section-217.608), where the indicated capital framework is NAIC RBC or the U.S. Federal banking capital rules, and where the indicated capital framework of the appropriate downstream building block parent is NAIC RBC or the U.S. Federal banking capital rules, the available capital scaling modifier is provided by table 2 to this [paragraph (a)(1)(ii)](/on/2024-09-19/title-12/section-217.606#p-217.606(a)(1)(ii)).

Table 2 to Paragraph (a)(1)(ii)—Available Capital Scaling Modifiers for NAIC RBC and the U.S. Federal Banking Capital Rules

| | Upstream building block parent's indicated capital framework: | |
| --- | --- | --- |
| NAIC RBC | U.S. Federal banking capital rules |
| Downstream building block parent's indicated capital framework: | | |
| U.S. Federal banking capital rules | Recalculated building block capital requirement \* 0.063 | 0. |
| NAIC RBC | 0 | Recalculated building block capital requirement \* 5.9. |
| Capital framework: | | |
| NAIC RBC | 0 | Recalculated building block capital requirement \* 5.9. |

(2) *Scaling to determine BBA ratio.* For purposes of determining the BBA ratio under [§ 217.603(b)](/on/2024-09-19/title-12/section-217.603#p-217.603(b))—

(i) A depository institution holding company for which the indicated capital framework is the U.S. Federal banking capital rules scales its building block available capital and building block capital requirement the common capital framework by using the methods described in [paragraphs (a)(1)](/on/2024-09-19/title-12/section-217.606#p-217.606s(a)(1)) of this section. For purposes of scaling under this [paragraph (a)(2)(i)](/on/2024-09-19/title-12/section-217.606#p-217.606(a)(2)(i)), the downstream building block parent's indicated capital framework is the U.S. Federal banking capital rules and the upstream building block parent's indicated capital framework is NAIC RBC; and

(ii) A depository institution holding company for which the indicated capital framework is NAIC RBC does not scale its building block available capital or building block capital requirement.

(b) *Scaling not specified by the Board but framework is scalar compatible.* Where a scaling modifier to be used in [§ 217.607](/on/2024-09-19/title-12/section-217.607) or [§ 217.608](/on/2024-09-19/title-12/section-217.608) is not specified in [paragraph (a)](/on/2024-09-19/title-12/section-217.606#p-217.606(a)) of this section, and the building block parent's indicated capital framework (*i.e.,* jurisdictional capital framework) is scalar compatible, a building block parent determines the scaling modifier as follows:

(1) *Definitions.* For purposes of this section, the following definitions apply:

(i) *Jurisdictional intervention point.* The jurisdictional intervention point is the capital level, under the laws of the jurisdiction for its domestic insurers, at which the supervisory authority in the jurisdiction may intervene as to a company subject its capital framework by imposing restrictions on distributions and discretionary bonus payments by the company or, if no such intervention may occur in a jurisdiction, then the capital level at which the supervisory authority would first have the authority to take action against a company based on its capital level.

(ii) *Jurisdiction adjustment.* The jurisdictional adjustment is the risk adjustment set forth in table 3 to this [paragraph (b)(1)(ii)](/on/2024-09-19/title-12/section-217.606#p-217.606(b)(1)(ii)), based on the country risk classification set by the Organization for Economic Cooperation and Development (OECD) for the jurisdiction. This adjustment is applied to the jurisdictional intervention point.

Table 3 to Paragraph (b)(1)(ii)—Jurisdictional Adjustments by OECD Country Risk Classification

| OECD CRC | Jurisdictional adjustment (percent) |
| --- | --- |
| 0-1, including jurisdictions with no OECD country risk classification | 0 |
| 2 | 20 |
| 3 | 50 |
| 4-6 | 100 |
| 7 | 150 |

(2) *Scaling capital requirement.* When calculating the building block capital requirement for a building block parent in accordance with [§ 217.607](/on/2024-09-19/title-12/section-217.607), where the indicated capital framework of the appropriate downstream building block parent is a scalar-compatible framework for which the Board has not specified a capital requirement scaling modifier, the capital requirement scaling modifier is calculated according to the following formula:

Equation 1 to Paragraph (b)(2)

[![](https://img.federalregister.gov/ER27NO23.001/ER27NO23.001_large.png)](https://img.federalregister.gov/ER27NO23.001/ER27NO23.001_original_size.png)

Where:

*Adjustment**scaling from* is equal to the jurisdictional adjustment of the downstream building block parent;

*Requirement**scaling from* is equal to the jurisdictional intervention point of the downstream building block parent; and

*Requirement**scaling to* is equal to the jurisdictional intervention point of the upstream building block parent.

(3) *Scaling available capital.* When calculating the building block available capital for a building block parent in accordance with [§ 217.608](/on/2024-09-19/title-12/section-217.608), where the indicated capital framework of the appropriate downstream building block parent is a scalar-compatible framework for which the Board has not specified an available capital scaling modifier, the available capital scaling modifier is equal to zero.