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Insurance: Solvency Capital Requirement (SCR) ratio in Europe 2019, by country

According to the European Insurance and occupational Pensions Authority (EIOPA) “Insurance undertakings are required by the Solvency II regulation to hold a certain amount of capital of sufficient quality in addition to the assets they hold to cover the contractual obligations towards policyholders. The amount of capital (called eligible own funds) required is defined by the Minimum Capital Requirement (MCR) and the Solvency Capital Requirement (SCR), which depend on the risks to which the undertaking is exposed."

SCR Ratio and MCR Ratio

As of the end of 2019, the German insurance industry had Solvency Capital Requirement (SCR) ratio of 310 percent. The United Kingdom (UK), which was the largest insurance market in Europe, had a SCR ratio half of that of the German insurance sector. In addition to the SCR ratio, insurers must also calculate minimum capital requirement (MCR). The MRC is essentially a tipping point in which, if an insurer falls below, the authorization of an insurer could be withdrawn.

Profitability of insurers

The combined ratio, which is the sum of claims and expenses incurred divided by premiums earned, is a measure of profitability used by insurance companies to see how efficiently they are running their business. The combined ratio can be displayed as a measure of 1 or as a percentage of 100. Insurance markets with a ratio of over 1 means that companies are paying out more in claims than they are receiving through premiums earned. The expense ratio is another measure of profitability and is calculated as the sum of expenses divided by premiums earned.

Weighted average Solvency Capital Requirement (SCR) ratio of insurance markets in Europe in 2019, by country

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Source

Release date

September 2020

Region

Europe

Survey time period

2019

Supplementary notes

The source added the following information "Insurance undertakings are required by the Solvency II regulation to hold a certain amount of capital of sufficient quality in addition to the assets they hold to cover the contractual obligations towards policyholders. The amount of capital (called eligible own funds) required is defined by the Minimum Capital Requirement (MCR) and the Solvency Capital Requirement (SCR), which depend on the risks to which the undertaking is exposed. If the amount of eligible own funds falls below the MCR, the insurance license should be withdrawn if appropriate coverage cannot be re-established within a short period of time."

The weighted average represents the aggregate own funds (sum of all undertakings) divided by aggregate SCR.

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Statistics on "KPI's of Europe's largest insurers"

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