Two of the competing approaches to assigning appropriate RBC parameters to the various risk elements in these RBC formulas are the traditional probability of ruin approach and the more recent expected policyholder deficit (EPD) approach (Bustic, 1994).
Following the convention in Bustic (1994), a simplified version of an insurance company demonstrates the ruin and EPD techniques.
In developing and promoting the EPD approach, Bustic criticized the traditional ruin approach because "[i]t is not sufficient merely to consider the probability of ruin-its severity must also be appreciated" (Bustic, 1994, 660).
Bustic, Robert P., 1994, Solvency Measurement for Property-Liability Risk-Based Capital Applications, The Journal of Risk and Insurance, 61: 656-690.
Incense-cedar could move from Libocedrus to Calocedrus; giant chinkapin from Castanopsis to Chrysolepis; saguaro from Cereum to Carnegiea; Key tree-cactus from Cereus to Pilosocereus; smokethorn from Dalea to Psorothamnus; and you could just see the bumelias (Bumelia), willow bustic
(Dipholis), and false-mastic (Mastichodendron) join each other in Sideroxylon.