Glossary

Types of Insurance Organisations - Consolidated Composites
Consolidated or group reports contain data covering the consolidated assets, liabilities and results of affiliated companies that operate as a group. These consolidated company reports may include capital and surplus and net income pertaining to minority shareholders as part of the overall capital and surplus and results. Composite companies may be authorised to operate in both property/casualty and life/health insurance. Financial reports on these organisations aggregate both types of insurance operations.

Gross Premiums Written
Direct premiums written plus reinsurance premiums assumed.

Reinsurance Ceded
Premiums ceded to other insurance and reinsurance companies.

Ratio - Net Premiums Written/Gross Premiums Written
The percentage of a company's gross writings that are retained for its own account.

Net Premiums Written
Gross premiums written less reinsurance ceded (retained premiums).

Net Premiums Earned
The result of deducting the amount of unearned premium from net premiums written. Unearned premium representing the unexpired term of an insurance policy at the date the calculation is performed.

Net Incurred Claims
Net paid claims during the current year plus the change in claims reserves since the previous year-end. Includes claims adjustment expenses.

Underwriting Result
Premiums earned less the sum of claims incurred, claims adjustment expenses and operating costs.

Net Operating Income before Tax
Premiums earned less claims and underwriting expenses incurred, plus miscellaneous income, less dividends to policyholders, plus net investment income excluding capital gains (where this information is available).

Net Income after Tax
The total after tax profit or loss generated from operations. Net income may exclude or include minority interests depending on data available.

Total Assets
The sum of all assets as valued in accordance with each country's laws and regulations and as reported by the company in its financial statements.

Net Technical Reserves
The aggregate amount, after recoveries due from reinsurers, of reserves for claims (including claims incurred but not reported - IBNR - reserves), claims adjustment expenses and unearned premiums. Where figures are reported for a composite company the aggregate will also include actuarially valued reserves to cover liabilities to life assurance policyholders.

Net Assets
The sum of paid in capital, paid in surplus, retained earnings, free reserves, statutory reserves and any voluntary contingency reserves. The difference between total assets and total liabilities.

Ratio - Net Technical Reserves/Net Premiums Written
The ratio demonstrates the relationship between claims reserves and risk assumed (as represented by premiums). It should be noted that where figures are reported for composite companies that the presence of actuarially valued life policyholder reserves may distort this ratio.

Ratio - Solvency Margin
Calculated as Net Assets divided by Net Premiums Written. The ratio demonstrates the relationship between available assets and risk assumed (as represented by premiums). In general terms, a lower ratio indicates a greater potential for assets to be exposed to risk.

It is important to review such aspects of a company's financial performance as its premium growth rate, risk profile as demonstrated by the classes of business written, proportion of premium ceded to reinsurers and the size of the company - this ratio should not be viewed in isolation. Again, where figures are reported for a composite company this ratio may be distorted by the life business written within that company.