Company's long-run financial viability and its ability to cover long-term obligations (See (p 574))
one of MIA's primary responsibilities is to make sure insurance companies remain solvent, i e , have sufficient assets and income, in order to have the ability to pay the claims of their policyholders
(1) A company's ability to meet its financial obligations on time (2) For an insurer, the ability to maintain capital and surplus above the minimum standard of capital and surplus required by law Also known as statutory solvency In Canada, known as capital adequacy
With regard to insurers, having sufficient assets (capital, surplus, reserves) and being able to satisfy financial requirements (investments, annual reports, examinations) to be eligible to transact insurance business and meet liabilities (G)
the state of having enough money to pay all of ones debts; the state of being solvent
To prove solvency is to prove that your plan will solve the problem and create advantages Think about the possible negative responses to your solution
Involves the capability of an entity to pay its bills eventually As measured by its assets relative to liabilities A public organization is solvent if its assets exceed its liabilities
Solvency is the ability of an insurance company to pay future claims In order to remain solvent, insurance companies must always keep an adequate surplus of funds in case an unforeseen increase in claims occurs
= With regard to insurers, having sufficient assets (capital, surplus, reserves) and being able to satisfy financial requirements (investments, annual reports, examinations) to be eligible to transact insurance business and meet liabilities
A business condition of financial viability in which net worth is positive and the business is expected to meet its financial obligations as they come due An insolvent business has a zero net worth and questionable viability Solvency indicators include the debt-to-asset ratio, debt-to-equity ratio and the equity-to-asset ratio