Risk-based Capital Ratio
Definition of "Risk-based capital ratio"
Measurement of the amount of capital (assets minus liabilities) an insurance company has as a basis of support for the degree of risk associated with its company operations and investments. This ratio identifies the companies that are inadequately capitalized by dividing the company's capital by the minimum amount of capital that the regulatory authorities feel is necessary to support the insurance operations. A ratio of 1.00 or greater is deemed to be satisfactory. This standard can be used to identify inadequately capitalized life and health companies, thereby enabling regulatory authorities to intervene before a company becomes insolvent.
Popular Insurance Terms
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Date after which losses may occur and be covered under a claims-made basis liability coverage. ...
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Continuing on an indefinite basis. ...
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Aggregate amount of insurance policies that are paid-up (or are being paid) that a life or health insurance company has on its books. The size of a life or health insurance company is often ...
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