The solvency ratio is a key metric comparing an insurer’s available own funds to its required capital, providing a snapshot of the company’s capacity to absorb losses and meet obligations. A strong ratio supports policyholder confidence, credit ratings, and regulatory approval for strategic initiatives like dividends or acquisitions. Insurance professionals monitor solvency ratios closely, using capital optimisation, reinsurance, and balance‑sheet management to maintain buffers while still deploying capital efficiently across lines of business and geographies.
