Regulatory Capital and Economic Capital

Indeed, it will determine to a significant extent the degree of protection provided to policyholders and the profitability that can be expected from shareholders and/or investors.

In terms of capital held by insurers, a distinction has to be made between:

• The regulatory capital - also often called the solvency margin - which is the capital requirement defined by the legislation and/or the insurance supervision authority in a particular jurisdiction
• The economic capital, which is the amount of capital required by an insurer to support the risks it faces, for a given measure and objective of solvability

AT Global has built experience in the application of each one of the methodologies under various jurisdictions and can help you in the determination of the solvency margin and in the definition of strategies to optimise the required value, including the impact of reinsurance and of the valuation rules used to assess the assets and liabilities.

Regulatory Capital and Economic Capital