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In Solvency 2, there is something called "Loss Absorbing Capacity of Deferred Taxes". I am not asking about the details of this, but how it works on a general level. Is what I write below correct?:

  • A deferred tax is a tax that is owed but have not been paid?
  • A deferred tax is loss-abosrbing because if you have deferred taxes and a loss happens, then you do not have to pay all those deferred taxes?
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