(1) Following the supervisory review process the Bank may, in exceptional circumstances, set a capital add-on for an insurance undertaking or reinsurance undertaking and direct that undertaking to comply with it.

(2) For the purposes of paragraph (1) exceptional circumstances exist where -

(a) the Bank concludes that the risk profile of the undertaking deviates significantly from the assumptions underlying the Solvency Capital Requirement, as calculated using the standard formula in accordance with Regulations 116 to 124 and either -

(i) the requirement to use an internal model under Regulation 131 is inappropriate or has been ineffective, or

(ii) a partial or full internal model is being developed in accordance with Regulation 131,

(b) the Bank concludes that the risk profile of the undertaking deviates significantly from the assumptions underlying the Solvency Capital Requirement, as calculated using an internal model or partial internal model in accordance with Regulations 125 to 138, because certain quantifiable risks are captured insufficiently and the adaptation of the model to better reflect the given risk profile has failed within an appropriate timeframe,