Capital adequacy reflects whether a UK insurer holds sufficient regulatory and economic capital to absorb losses and continue meeting its obligations, as measured through solvency ratios, internal models, and stress and scenario testing. Boards, CROs, and CFOs rely on forward‑looking assessments and ORSA outputs to judge capital strength under different business plans and stress events, using levers such as reinsurance, portfolio mix, and balance‑sheet actions to maintain resilience in line with Solvency II and PRA expectations.
