Solvency Ratio

The Solvency Ratio of an insurance company is the size of its capital, relative to all risks it has taken. The Solvency Ratio is a measure of the risk an insurer faces of claims it cannot absorb. The amount of premium written is a better measure than the total amount insured because the level of premiums is linked to the likelihood of claims. 

Calculated as: Shareholders’ Equity  / Net Written Premium  x 100