April 2016 Q1 v - Risk Margin

The answer gives starting SCR of 435, but question gives 430. It's not clear to me how this 435 was derived, is it that the diversification benefits of hedgeable risks has been removed (and some rounding applied)?

 

Risk margin is estimated in respect of non-hedgeable SCR.
Yes. if you ignore diversification benefit, it would be: 140 (cat risk) + 25 (cpd risk) + 50 (reserve risk) + 100 (uw risk) + 80 (operational risk) + 40 (other) = 435
Also, it is not given whether other is a non-hedgeable risk or not and also we are not given how much of the equity and cpd risk is non-headgeable. If we assume cpd & other risks are fully non-hedgeable and equity risk is completely hedgeable, we'd get the 435 seen above.
SCR of 430 is post diversification.
Undiversified scr = 430/(1-9.5%) = 475, which is same as 435 + 40 (w.r.t. hedgeable risks such as spread & equity risk) = 475.
Hope this helps.