Actuarial & Insurance

Intermediate

Solvency Ratio

Insurer's capital buffer relative to its liabilities.

Formula

SR = \frac{A - L}{L}

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Variables

SRSolvency ratio

AAssets

LLiabilities

Example

A=$150M, L=$100M: SR = 50%

Did You Know?

Regulators such as Solvency II set minimum capital so insurers can survive a 1-in-200-year catastrophe.

actuarial solvency capital

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