Solvency


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Related to Solvency: Solvency II, solvency ratio

Solvency

Ability to meet obligations.

Solvency

The state of a company being able to service its debt and meet its other obligations, especially in the long-term. Solvency is a necessary condition for a business to operate. If a company is unable to meet its obligation, it is said to be insolvent and must undergo bankruptcy in order to either liquidate or restructure. See also: Insolvency risk, Accounting insolvency.
References in periodicals archive ?
Those that focus on risk and capital management and maintain well-diversified or defensible niche strategies are well-prepared for Solvency II.
Some countries are eyeing equivalence as a way to develop a consistent, risk-based solvency regime and reporting requirements for the insurance sector.
Also blocking the way is the idea of equivalence under Solvency II, which includes provisions for assessments of the solvency systems and group supervision of countries outside the EU (referred to as "third countries").
A copy of the solvency regulation update draft is available here.
Insurers of non-life insurance business to have assets in excess of minimum solvency requirement.
Analysis of market opportunities and challenges faced by insurers and reinsurers following the implementation of Solvency II.
Five CO-OPs -- in Wisconsin Arizona, Oregon, New Mexico, Nevada and Louisiana -- have used 60 percent to 90 percent of the solvency money.
As well as publishing the final rules, the PRA also published a consultation paper on the application process for the "volatility adjustment", an adjustment to the Solvency II risk-free discount rate which will be used to value insurance liabilities.
He said that Bahraini banks in particular and Gulf and Arab banks in general have better financial solvency than European and western banks as Arab and Gulf banks determine financial solvency on the basis of shareholders rights and retained profits unlike western banks which determine financial solvency on the basis of other elements that have been superseded by Basil III.
We have been very much against the idea of establishing for pension funds and other institutions for occupational retirement provision (IORPs) a European risk-based capital requirement framework similar to the one set out in the Solvency II legislation for insurance companies.
Bankruptcy is considered to be the last resort for local governments that are financially insolvent and a valuable tool to help them return to solvency (Farmer, 2013).
Although the Solvency II regime has yet to be finalised, Moody's Investor Service has outlined its expectation that solvency ratios will ultimately exhibit a more complex volatility under Solvency II than under Solvency I, as both the available capital and the capital requirements of the solvency ratio will change with market conditions.