Liabilities

The company must take into account the nature of its liabilities as well as its solvency position.

Cash Flows: Besides the investment yields, money flows as paid contributions and flows out as pension expenditure in the company. The pension expenditure is calculated depending on the number of pensioners and the average funded pensions. The contributions depend on the total salaries of the insured persons.

Solvency Capital: Solvency capital is the amount by which the total assets of the company exceed the sum of its reserves. It functions as a buffer against the variation of the investment results. Because the reserves of a pension insurance company must always be fully covered by its assets, a non-positive solvency capital means a bankruptcy. Therefore, the development of the solvency capital is an important factor in policy evaluations. The legislation prescribes various minimum and target levels for the solvency capital of a pension insurance company. The basic quantity is the solvency border, which depends on the structure of the company's investment portfolio. The lower border of the target zone is twice the amount of the solvency border. The position of the solvency capital relative to these levels is an indicator of the solvency risk of the company.

 

Posted Date: 9/11/2012 1:35:28 AM | Location : United States

Ask an Expert

Related Discussions:- Liabilities, Assignment Help, Ask Question on Liabilities, Get Answer, Expert's Help, Liabilities Discussions

Write discussion on Liabilities
Your posts are moderated

Write your message here..

Related Questions

Explain the re-measurement and translation process, Explain the re-measurem... Explain the re-measurement and translation process within FASB 52 of translating into the reporting currency the books of a completely owned affiliate that keeps its books in the l

Current assets management, how is operating cycle applicable to poultrybusi... how is operating cycle applicable to poultrybusiness in Uganda (broilers)

Importance of gantt charts in project communication process, Due to the com... Due to the complexity of the tasks involved in many projects, communication of responsibility for those tasks is often helped by means of graphical planning techniques.

The characteristics of the website development project, P Company manufactu... P Company manufactures and sells a range of children's clothing through its retail shops and is currently designing a website in order to allow customers to purchase products onlin

Leverage, what is financial leverage what is financial leverage

Leveraged buyouts, Leveraged Buyouts (LBOs) A leveraged buyout is a fin... Leveraged Buyouts (LBOs) A leveraged buyout is a financing technique where debt is used to purchase the stock of a corporation and it frequently involves taking a public compan

Advanced Accounting, Balance Sheets Peony Ltd. Aster Ltd. ... Balance Sheets Peony Ltd. Aster Ltd. Assets: Cash $ 62,500 $ 25,000 Accounts receivable 187,500 200,000 Inventori

Finance charges on credit card, Jack needs to borrow $1,000 for the next ye... Jack needs to borrow $1,000 for the next year. Bank South will give him the loan at 9 percent. Suncoast bank will give him the loan at 7 percent with a $50 loan origination fee. Fi

Case study - itraxx, (a) iTraxx is a group of credit derivative index man... (a) iTraxx is a group of credit derivative index managed by the International Index Company (IIC) and covering Europe and Asia and Australia. The body in the portfolio forming th

What was the first argument against traditional approach, What was the firs... What was the first argument against traditional approach The first argument against traditional approach was based on its emphasis on issues relating to procurement of funds by