## What is meant by solvency margin?

Solvency Margin — the insurer’s unimpaired surplus as a percent of outstanding loss reserve (OLR).

## How do you calculate solvency margin ratio?

Summary

1. The solvency ratio helps us assess a company’s ability to meet its long-term financial obligations.
2. To calculate the ratio, divide a company’s after-tax net income – and add back depreciation– by the sum of its liabilities (short-term and long-term).

What is a good solvency ratio?

Acceptable solvency ratios vary from industry to industry, but as a general rule of thumb, a solvency ratio of less than 20% or 30% is considered financially healthy. The lower a company’s solvency ratio, the greater the probability that the company will default on its debt obligations.

### What is a combined ratio insurance?

Put simply, a combined ratio is a measure of an insurance company’s profitability expressed in terms of the ratio of total costs divided by total revenue—which for insurance companies translates to incurred losses plus expenses divided by earned premiums: Combined Ratio = (Incurred Losses + Expenses)/Earned Premiums.

### What is solvency ratio of HDFC Life?

Solvency Ratios

Company 31.03.2019 31.12.2018
Exide Life 2.08 1.8
Future Generali Life 1.62 1.64
ICICI Prudential Life 2.15 2.34
HDFC Life 1.88 1.93

What does solvency ratio indicate in insurance?

The solvency ratio is a simple indicator to know how good or bad the financial strength of an insurer is. An insurer with a high solvency ratio has more chances of fulfilling its commitment of paying your beneficiary the sum assured in case of your demise,” states the Aditya Birla Capital website.

#### Which ratios are solvency ratios?

Types of Solvency Ratios

• Debt to equity ratio. Debt to equity is one of the most used debt solvency ratios.
• Debt Ratio. Debt ratio is a financial ratio that is used in measuring a company’s financial leverage.
• Proprietary Ratio or Equity Ratio. Proprietary ratios is also known as equity ratio.
• Interest Coverage Ratio.

#### What is the difference between loss ratio and combined ratio?

The loss ratio and combined ratio are used to measure the profitability of an insurance company. The loss ratio measures the total incurred losses in relation to the total collected insurance premiums, while the combined ratio measures the incurred losses and expenses in relation to the total collected premiums.

What are composite ratios?

A composite ratio or combined ratio compares two variables from two different accounts. One is taken from the Profit and Loss A/c and the other from the Balance Sheet. For example the ratio of Return on Capital Employed.