Return on Capital of insurance companies under Solvency II

Vojtěch Pivný

Ekonomika a Management, 2014, vol. 2014, issue 1

Abstract: New insurance industry regulation Solvency II will go live starting 1.1.2016. There is included a calculation of the solvency requirement. The regulation provides with options from standard approach to fully internal approach of risk modelling. The article shows advantages and disadvantages of different approaches. Following selected model the article links together regulatory outputs in form of company capitalization with financial measure - Return on Economic Capital. At the same time author provides insight to standard financial measure - Return on Equity as well as economic capital disaggregation to particular products. Lastly, the author presents capitalization of company internal processes effectivity which is the most important example of using model in the business practice.

Keywords: Solvency II; Economic Capital; Rentability; Solvency II; Ekonomický kapitál; Výnosnost (search for similar items in EconPapers)
JEL-codes: G31 (search for similar items in EconPapers)
Date: 2014
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