Category: Capital management · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed
Insurance capital
Insurance capital is the surplus of an insurer’s assets over its liabilities, held to absorb unexpected losses and meet regulatory requirements. It is the cushion that protects policyholders if claims and expenses exceed premiums and reserves.
Components — own funds under Solvency II
Solvency II divides own funds into three tiers based on the quality of capital (Article 93, Directive 2009/138/EC):
Tier 1 — ordinary share capital, retained earnings, perpetual subordinated debt with strong loss-absorbing features. Highest quality, fully available to absorb losses on a going concern.
Tier 2 — subordinated debt with weaker loss-absorbing features.
Tier 3 — limited capital instruments and net deferred tax assets.
Specific quantitative limits restrict the use of Tier 2 and 3 to cover the SCR and MCR.
Our service promise. We acknowledge every quote request the same working day. For straightforward risks, indicative terms typically follow within five working days. Complex risks — higher-risk buildings, cladding, mid-term proposals requiring fresh underwriting — may take longer; we’ll send you a progress note by the end of the fifth working day in those cases.