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Insurance

What is Capital Allocation?

Capital Allocation The process by which an insurer or group assigns capital resources to business lines, risks, or subsidiaries, optimizing return on equity and regulatory capital requirements.

Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework

How is “Capital Allocation” Used in Practice?

Strategic capital allocation enables insurers to optimize returns while meeting solvency and regulatory capital standards.

Certification Exam Relevance

CFAACCAFRM

Who Needs to Know This Term?

  • Financial Analysts
  • Bankers
  • Traders

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Frequently Asked Questions

What is Capital Allocation?

The process by which an insurer or group assigns capital resources to business lines, risks, or subsidiaries, optimizing return on equity and regulatory capital requirements.

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