What is the RBC ratio formula?

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What is the RBC ratio formula?

RBC ratio measures how well capitalized an insurer is against the regulator’s required level. It is defined as Total adjusted capital divided by ACL. Here, Total adjusted capital represents the company’s available capital after adjustments, and ACL stands for Authorized Control Level, the regulator’s risk-based capital threshold. This ratio tells you how many times the required capital the company has; a value above 1 (or 100%) means capital is more than enough relative to the requirement, while a value below 1 signals potential regulatory concern. The denominator must be ACL and the numerator TAC to reflect the standard regulatory calculation; other ways of forming the ratio would mix up quantities that aren’t used in the RBC framework.

RBC ratio measures how well capitalized an insurer is against the regulator’s required level. It is defined as Total adjusted capital divided by ACL. Here, Total adjusted capital represents the company’s available capital after adjustments, and ACL stands for Authorized Control Level, the regulator’s risk-based capital threshold. This ratio tells you how many times the required capital the company has; a value above 1 (or 100%) means capital is more than enough relative to the requirement, while a value below 1 signals potential regulatory concern. The denominator must be ACL and the numerator TAC to reflect the standard regulatory calculation; other ways of forming the ratio would mix up quantities that aren’t used in the RBC framework.

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