Gearing factor won’t do anything to help open up capacity for the maxed out projects, because it only adds capacity for non-overlapping risk. There is no other way to increase capacity for those projects whose covers are already at 20% of MCR, other than to increase exposure to each project (increase the 20% of MCR limit, not advisable as this would overexpose the mutual to a large risk) or to increase the MCR, which is what we must do.
Please correct me if I’m wrong, and if there are other ways to increase capacity for these big defi projects, I’m all ears. Bear in mind these projects that buy more than 80% of the mutual’s total cover, and want to buy more - we have no capacity for them currently. But we could. And i believe the mutual is in a much stronger position to attract capital now than ever before. Why ignore your biggest customers, when they want to buy your product, and you are able to procure the product ? The wide growth strategy will have room to grow and time to catch up, and won’t have to deal with bottlenecks like these. Win-win.
We are actually in the exact same scenario as we were couple months back, and Hugh explained it much more clearly: