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.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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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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