What is the Definition of Capital?
Shareholder’s equity (for publicly traded insurance companies) and retained earnings (for mutual insurance companies). There is no general measure of capital adequacy for property/casualty insurers. Capital adequacy is linked to the riskiness of an insurer’s business. A company underwriting medical device manufacturers needs a larger cushion of capital than a company writing Main Street business, for example. (See Risk-based capital; Solvency; Surplus)
Source: Insurance Handbook A guide to insurance: what it does and how it works | https://www.iii.org/
Label: Insurance
Theme: Dictionary of Insurance Terms
Other Questions: What is the definition of Insurance?
What is the Definition of Capital?
Check out other definition of insurance terms below:
What is the Meaning of FUTURES In Insurance Terms?
Agreement to buy a security for a set price at a certain date. Futures contracts usually involve commodities, indexes or financial futures.
What is the Meaning of GAP INSURANCE In Insurance Terms?
An automobile insurance option, available in some states, that covers the difference between a car’s actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company. Mainly used for leased cars. (See Actual cash value)
What is the Meaning of GENERAL ACCOUNT In Insurance Terms?
An undivided investment account in which insurers maintain funds that support contractual obligations for guaranteed insurance products such as whole life insurance or fixed-rate annuities. Contrast with Separate account.
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