What is Capital Adequacy?
Capital Adequacy A regulatory standard requiring insurers to maintain sufficient capital to absorb losses and meet policyholder obligations under adverse conditions.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Capital Adequacy” Used in Practice?
Regulators assess capital adequacy to ensure insurers can cover unexpected large losses and continue meeting policyholder claims.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Capital Adequacy?
A regulatory standard requiring insurers to maintain sufficient capital to absorb losses and meet policyholder obligations under adverse conditions.
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