On the Determinants of Solvency Margin of Indian General Insurers

Abstract

Solvency ratio is an important indicator of the financial health of an insurance firm and denotes its ability to survive in the long run. It is the ratio of the amount of Available Solvency Margin (ASM) to the amount of Required Solvency Margin (RSM). Available Solvency Margin means the excess value of assets over the value of life insurance liabilities and other liabilities of policyholders' and shareholders' funds. While life insurers are considered financial intermediaries, general insurers are perceived as risk takers.