Solvency is the basic index that must be considered when measuring the financial situation of insurance companies. Solvency is the ability of insurance companies to repay debts.
The company's assets must be greater than its liabilities, and the difference between total assets and liabilities is the policyholder's surplus. In order to ensure that insurance companies do not exaggerate the income of their policyholders, regulators require them to adopt conservative accounting procedures. These procedures only allow insurance companies to reflect recognized assets in their financial statements.
There are certain regulations on the types of authorized assets, and they must be easily converted into cash. The accounting procedures that insurance companies must adopt also require insurance companies to list loss reserves and unexpired liability reserves as liabilities.
The official definition of solvency is: the ability of an insurance company to repay its debts.
The understanding of this sentence needs to be related to three indicators of solvency. Under the current second-generation compensation system, there are three indicators to measure the solvency of insurance companies, namely, core solvency adequacy ratio, comprehensive solvency adequacy ratio and comprehensive risk rating.
Attached here is this year's ranking list of insurance companies: which are the top ten insurance companies? This paper analyzes the solvency, hot-selling products and market awareness of each company in detail.
The core solvency adequacy ratio is used to measure the adequacy of high-quality capital of insurance companies;
The comprehensive solvency adequacy ratio is used to measure the overall capital adequacy ratio of insurance companies;
The comprehensive risk rating mainly considers the capitalization risk and difficult capitalization risk of the insurance company, and measures the overall solvency risk of the company.
Both the core solvency adequacy ratio and the comprehensive solvency adequacy ratio are percentages, and the calculation formula is:
Core solvency adequacy ratio = insurance company's core capital/minimum capital
Comprehensive solvency adequacy ratio = actual capital/minimum capital of insurance company
Second, does solvency have a big impact on the policy?
In fact, solvency has little impact on the policy itself, so you don't have to worry too much about the solvency of the insurance company when configuring insurance.
Even if the solvency adequacy ratio is low, it doesn't mean that insurance companies can't fulfill their insurance responsibilities, but there are risks in fulfilling their insurance responsibilities in the future!
Supervision simply does not allow the solvency of insurance companies to become poor!
To be a solvent company, you need to meet three requirements:
The core solvency adequacy ratio is not less than 50%
The comprehensive solvency adequacy ratio is not less than 100%.
The comprehensive risk rating is above Grade B..
If one of the three points is not satisfied, once the company whose solvency is not up to standard, there will be very strict measures to prevent the solvency and comprehensive risk rating of the insurance company from getting worse. Attention is very strict.