Premium-to-Surplus Ratio

Definition

  • A metric commonly used in the insurance industry to measure an insurer's financial strength. The Premium-to-surplus ratio gives insight into how dependent an insurer is on credit, with a lower ratio generally indicating better financial strength. To find an insurer's premium-to-surplus ratio, one divides net premiums written by surplus.

Synonyms
insurance premiums to surplus

Related Terms and Acronyms

  • Developed to Net Premiums Earned Definition,
    • A method used to determine if the premiums charged by an insurer are in balance with the benefits they pay out.
  • Expense Ratio Definition,
    • A method of calculating an insurer's operating efficiency.
  • Loss Ratio Definition,
    • A method of comparing an insurer's losses to premiums earned in a specific period of time.
  • Medical Loss Ratio Definition,
    • A method of comparing the medical costs paid to the premiums earned by an insurance company in a specific period of time.
  • Policy Illustration Definition,
    • An outline of how a policy will perform under various conditions over a period of time.
  • Policyholder Dividend Ratio Definition,
    • A ratio comparing the dividends paid to policyholders to net premiums earned by the insurer.
  • Policyholder Surplus Definition,
    • A method of determining an insurance company's relative financial strength by finding the difference between the company's assets and liabilities.
  • Premium Definition,
    • A payment made to an insurance company for insurance coverage.
  • Premium Balances Definition,
    • A ledger kept by insurance companies recording insurance premiums.
  • Premiums Written Definition,
    • A sum of the premiums from all the policies that a company has written in a given period of time.
  • Reinsurance Recoverables to Policyholder Surplus Definition,
    • A method used to determine how much an insurer relies on reinsurance.
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