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🏛️ '''Individual capital guidance (ICG)''' is a confidential, firm-specific capital requirement communicated by the UK's [[Definition:Prudential Regulation Authority (PRA) | Prudential Regulation Authority]] (formerly the FSA) to an individual [[Definition:Insurance carrier | insurer]] or banking institution, setting out the minimum amount and quality of capital the regulator expects the firm to hold above the standard regulatory minimum. For insurance firms operating under the pre-[[Definition:Solvency II | Solvency II]] UK regime — and for banking entities under Basel frameworks — ICG represented the supervisor's quantitative judgment on risks not fully captured by standardized capital rules, effectively tailoring capital requirements to the specific risk profile of each firm.

⚙️ The PRA arrived at an insurer's ICG through a supervisory review process that evaluated the firm's own [[Definition:Internal capital model | internal capital assessment]] (known as the Individual Capital Adequacy Standards, or ICAS, process for insurers), stress testing results, risk management quality, and exposure concentrations. The regulator would then either endorse the firm's self-assessed capital need or impose a higher figure, communicated privately as a percentage of the relevant regulatory capital requirement or as an absolute amount. Because ICG was confidential, it did not appear in public filings, and firms were prohibited from disclosing it — a feature designed to prevent market participants from drawing adverse inferences about individual companies.

📌 Although [[Definition:Solvency II | Solvency II]] replaced much of the ICG framework for EU and UK insurers by introducing the [[Definition:Solvency capital requirement (SCR) | Solvency Capital Requirement]] and [[Definition:Minimum capital requirement (MCR) | Minimum Capital Requirement]] as public, risk-based standards, the concept of individualized supervisory capital add-ons did not disappear entirely. The PRA retains the ability to impose capital scalars and buffers on specific firms through its Pillar 2 supervisory process when it identifies risks — such as operational weaknesses, model deficiencies, or emerging exposures — that the standard framework does not adequately address. Understanding ICG and its legacy is important for insurance professionals involved in [[Definition:Capital management | capital management]], [[Definition:Regulatory compliance | regulatory engagement]], and [[Definition:Mergers and acquisitions (M&A) | M&A]] due diligence, since historical ICG levels can influence how legacy capital positions and regulatory relationships are assessed during transactions.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Solvency capital requirement (SCR)]]
* [[Definition:Minimum capital requirement (MCR)]]
* [[Definition:Solvency II]]
* [[Definition:Prudential Regulation Authority (PRA)]]
* [[Definition:Internal capital model]]
* [[Definition:Capital management]]
{{Div col end}}

Definition:Individual capital guidance (ICG) - Revision history

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