As a key figure, the coverage ratio is at the heart of the quantitative risk analysis of pillar 1. It is established as the ratio of the company’s own funds, which are calculated by subtracting the company’s liabilities from its assets (both based on their market values), to the Solvency Capital Requirement (SCR). For the evaluation of the company's own funds, the traditional principal of prudence of the German GAAP is replaced by a market oriented approach; consequently all actors that are dealing with the solvency balance sheet - with the widely spread balance according to German GAAP being replaced - are facing a paradigm shift. This new way of thinking has numerous consequences, particularly for risk modelling.

We are happy to assist you - please contact us.

Standard formula

Meyerthole Siems Kohlruss accompanies and advises companies with regard to the calculation of individual aspects of the standard formula. This includes, among other elements, the Best Estimate calculation, the estimation of the Risk Margin and the solvency balance sheet. Additionally, Meyerthole Siems Kohlruss assists companies in validating the results of the standard formula.

Undertaking-specific parameters (USP)

When determining the SCR using the standard model it is possible to calibrate some risk factors according to a company's individual data. To give an example: In "Non-Life", the Premium and Reserve risk may be calculated using undertaking-specific parameters (USP). Meyerthole Siems Kohlruss counsels companies in implementing and calculating company-specific parameters and offers support in preparing and validating the relevant data.

Download product flyer PDF

Partial (internal) models

Regarding solvability, a (partial) internal model is much more precise than the standard approach. Beyond that, the capabilities of internal models are not limited to this topic; for instance, using an internal model the risk reduction merit of reinsurance coverage may be measured "live" and in detail, and a tailor-made gauging of your underwriting structure allows detailed analyses in order to achieve an economic evaluation of your business (particularly with a view to value-oriented management.) In the context of Solvency II this builds a leading edge, for example when carrying out ORSA.