A statutory ratio test, which is usually net written premiums divided by capital and surplus.
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Solvency ratio means the ratio of the amount of Available Solvency Margin to the amount of required solvency margin. “Available Solvency Margin” means the excess of value of assets over the value of the liabilities and other liabilities of policyholders’ fund and shareholders’ funds. The “Required Solvency Margin” is based on mathematical reserves and sum at risk, and the assets of the policyholder funds. The numerator of the ratio represents the items such as (i) Capital or funds (ii) Various reserves that include price fluctuation reserve (iii) A portion of unrealized profits obtained from real estate and stocks