UK,REFERENCE: See: solvency margin.
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UK: Surplus of insurer’s realisable assets over its liabilities. General insurers and long-term insurers must demonstrate a required minimum margin of solvency (RMM). For a general insurer this is the higher of two results, one based on annual premiums (the premium basis), the other based on the average of three years’ claims (the claims basis). Also an insurer must ensure that the margin does not fall below the guarantee fund. One-third of the required margin of solvency constitutes the minimum guarantee fund (MGF). The MGF for a general insurer varies according to the class of business up to €3 million for motor, aviation, general, credit and suretyship (less for mutuals). RMM also varies, according to class, for long-term business. For life business this is €3 million for proprietary companies (less for mutuals). See ASSET RULES; DETERMINATION OF LIABILITY RULES; MINIMUM GUARANTEE FUND.
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The total assets of an insurance company must exceed its liabilities (other than share capital) by a relevant amount, known as the margin of solvency.