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A Primer on Non-Life Insurance Ratios

Explore the essential concepts of non-life insurance ratios, including solvency margins, coverage ratios, and quality of capital. Learn about leveraging capital, compliance with legal requirements, and different forms of capital in the insurance industry.

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A Primer on Non-Life Insurance Ratios

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  1. A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn@worldbank.org

  2. A Primer on Non-Life Insurance RatiosSolvency and Capital

  3. Premiums and Capital • Kenney Rules, Leverage, Capital as a percentage of premium

  4. Provisions and Capital • A response to the fact that companies need capital until all claims are finalized and paid.

  5. Solvency Margin Requirements • A basic index type solvency margin • Alternative approaches may use a different formula

  6. Coverage Ratio • Checks measure of actual solvency against a standard base. • If required solvency is the legal requirement then the ratio should be >100%, preferably with a buffer.

  7. Quality of Capital • Capital can come in different forms from pure equity to less permanent subordinated debt, for example. • Some reinsurance contracts may supply a form of capital. • Where there is more than one form then it is useful to separate out the components and compare “core” capital as well as “total capital”.

  8. A Primer on Non-Life Insurance RatiosSixth Break

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