MCT vs FCT
Battleacts have stated similarities and differences between FCT and ORSA clearly but I'm unable to find the difference between MCT and FCT. They are all very similar in terms of risk control and ensuring adequate capital. Could you please expand more on this?
Comments
At a high-level:
MCT is basically a capital test to verify if an insurer has sufficient capital to operate on a going concern basis.
The FCT is meant to see how an insurer will perform under plausible adverse scenarios.
it sounds like MCT is a subset of FCT, is this correct?
They are related - I wouldn't say it is a subset. They both apply the principal of calculating your capital required. Maybe this is too much of an oversimplification but FCT is kind of like doing the MCT under adverse scenarios
is the MCT forecast period the current financial/one year?
and FCT forecast is 3-5 years?
MCT is just current year and yes to your FCT statement