A Primer on Non-Life Insurance Ratios Craig Thorburn [email protected].
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Transcript of A Primer on Non-Life Insurance Ratios Craig Thorburn [email protected].
![Page 2: A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn@worldbank.org.](https://reader036.fdocuments.us/reader036/viewer/2022082709/56649f4d5503460f94c6e553/html5/thumbnails/2.jpg)
A Primer on Non-Life Insurance Ratios
Solvency and Capital
![Page 3: A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn@worldbank.org.](https://reader036.fdocuments.us/reader036/viewer/2022082709/56649f4d5503460f94c6e553/html5/thumbnails/3.jpg)
Premiums and Capital
• Kenney Rules, Leverage, Capital as a percentage of premium
%100xGPW
Capital %100xCapital
GPW
%100xNPW
Capital%100x
Capital
NPW
![Page 4: A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn@worldbank.org.](https://reader036.fdocuments.us/reader036/viewer/2022082709/56649f4d5503460f94c6e553/html5/thumbnails/4.jpg)
Provisions and Capital
• A response to the fact that companies need capital until all claims are finalized and paid.
%100Pr
xovisions
Capital
![Page 5: A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn@worldbank.org.](https://reader036.fdocuments.us/reader036/viewer/2022082709/56649f4d5503460f94c6e553/html5/thumbnails/5.jpg)
Solvency Margin Requirements
• A basic index type solvency margin
• Alternative approaches may use a different formula
ovisionsClaimsK
emiumK
F
MaxinSolvencyM
Pr
Prarg
2
1
![Page 6: A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn@worldbank.org.](https://reader036.fdocuments.us/reader036/viewer/2022082709/56649f4d5503460f94c6e553/html5/thumbnails/6.jpg)
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.
%100Re
xencyquiredSolv
olvencyAvailableS
![Page 7: A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn@worldbank.org.](https://reader036.fdocuments.us/reader036/viewer/2022082709/56649f4d5503460f94c6e553/html5/thumbnails/7.jpg)
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”.
![Page 8: A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn@worldbank.org.](https://reader036.fdocuments.us/reader036/viewer/2022082709/56649f4d5503460f94c6e553/html5/thumbnails/8.jpg)
A Primer on Non-Life Insurance Ratios
Sixth Break