Hi all Is there a typical guideline on how low can the solvency margin ratio can be for a general insurer? Correct me if I'm wrong but from the top of my head, I think the ratio is defined as: (Total assets - Total liabilities) / Total liabilities
Hi jensen, Know it's too late now - seeing that ST7 is just over. But here is my thoughts: Ratio defined in the notes was: Free Reserves / Net Written Premium Don't think there is any particular guidance on that ratio, but a company's Minimum Capital Requirement (MCR) is the minimum amount that a company needs to hold under Solvency I. A quick (rough) way of calculating the MCR is: 18% * Max (Gross Written Premium, Gross Earned Premium) * Max (50%, RI Factor) The Reinsurance factor (RI factor) is calculated based on the average claims incurred over the last 3 years by dividing net claims incurred by gross claims incurred. The advantage an insurer can get from this is limited to 50%. That is the only minimum amount of capital that I know of that an insurer MUST have.
Hi balo No worries, but thanks for the info. It's more for my knowledge rather than exam. Hope the exam went well for you.
