Equity of shareholders of a stock insurance company. The company’s capital and surplus are measured by the difference between its assets minus its liabilities. This value protects the interests of the company’s policyholders in the event it develops financial problems, the policy owners benefits are thus protected by the insurance company’s capital. Shareholders’ interest is second to that of policy owners.
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US: In captive insurance, an all-purpose term having one of three different meanings
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In captive insurance, an all-purpose term having one of three different meanings the amount initially needed to set up a captive, or the initial amount paid in the total of this paid-in capital plus other forms of capital, like letters of credit or the sum of these two plus accumulated surplus. The difference between capital in a captive and other forms of insurance capital is that the owners usually consider it risk capital, ready to be used up by adverse results of the business. This is why one seldom hears about &#8220impairment of capital&#8221 in captive financial discussions. Instead, one hears about &#8220reduction in capital.&#8221

The sum of paid up capital, gross paid in and contributed surplus, and unassigned surplus.

A process used to determine whether to make long-term (more than one-year) investments.Critical Probability Method : A method that tells a risk manager to by Insurance instead of retaining the exposure if the probability that the losses will exceed the premium savings exceeds a critical probability selected by the risk manager. Persons with high worry values will normally set low critical probabilities.Expected Tangible Loss Method : A method that Directs the risk manager to select the tool that would produce the lowest average tangible rupee outlay in the long run.Insurance : A transfer under which the source of funds in an Insurer. As an institution, Insurance is a device that combines the risk of two or more Insureds through actual or promised contribution to a fund out of which claims are paid.Internal Rate of Return Method : A capital budgeting method under which the financial manager first calculates the discount rate that would equate the present value of the net cash inflow with the amount of the investment. If this discount rate is less than the firm’s cost of capital or some other desired minimum return, the investment is not worthwhile. If the discount, rate equals or exceeds this desired minimum return, the investment may be worthwhile but its internal rate of return must be compared with the corresponding return on other possible investments.Loss Matrix : A listing of the rupee losses associated with each possible risk management tool and each possible outcome. For example, a decision to retain would produce a loss of Rs. 10,000 if a Rs. 10,000 loss occurs. A decision to purchase complete Insurance would produce a ‘loss’ of the Insurance premium no matter what the outcome may be. The original loss matrix should be converted to an after-tax basis and extended to include the intangible costs worry caused by short-run uncertainty) as well as the tangible rupees losses.Worry Method : A variation of the expected tangible loss method that Directs the risk manager to select the tool that would minimize the average tangible rupee outlay in the long run plus the value that the risk manager assigns to any worry caused by the short-turn uncertainty, if any, that remains.Risk, Foreign Exchange Risks : potential losses to foreign loss exposures arising usually out of declines in the value of the foreign currency relative to domestic currency. Foreign exchange risks are speculative risks, not pure risks, because the exchange rates may change in a favorable Direction.
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A process used to determine whether to make long term (more than one year) investments.