Solvency ratio is the very important component for the financial analyst and the customers to determine if the insurance company is doing financially good or not. Solvency ratios are known as the leverage ratios. It is believed that the insurance companies which have good solvency ratios are considered good financially.
Irdai have set guidelines to all insurance companies to set a minimum solvency ratio of 1.5.
Solvency Ratio Formula
Solvency Ratio=(Net Income + Depreciation) / (Short-Term Liabilities + Long-Term Liabilities)
There are four different types of solvency ratios
Companies | Types | Solvency Ratio as of 2022. |
---|---|---|
HDFC Ergo Health Insurance | Health insurance | 1.68 |
Niva bupa health Insurance | Health insurance | 1.7 |
Care health insurance | Health insurance | 1.81 |
Aditya birla health Insurance | Health insurance | 1.73 |
Star health Insurance | Health insurance | 1.7 |
The Solvency ratio is the overall measure of Solvency as it calculates the company's actual cash flow apart from income.
There are four different types of solvency ratios
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Simran is an insurance expert with more than 3 years of experience in the industry. She may have all the answers to your insurance queries. With a background in Banking, she proactively helps her readers to stay on par with all the latest Insurance industry developments.