Assessment of financial stability and solvency of insurance organizations. Financial stability of the insurance company Financial stability and solvency of the insurance company

As a result of studying this chapter, the student should have an understanding of:

• what is the financial stability and solvency of an insurance organization;
• what is the essence of assessing the solvency of an insurance organization;
• what is the regulatory and actual solvency margin;
• what is the content of the Russian methodology for assessing the solvency of an insurance organization;
• what are the features of foreign methods for assessing solvency;
• what is budgeting of the financial activities of an insurance organization.

Keywords: financial stability of the insurance organization, solvency of the insurance organization, solvency margin, regulatory solvency margin, actual solvency margin, budgeting of the financial activities of the insurance organization, draft budget.

General characteristics of the financial stability and solvency of an insurance organization

Financial stability of the insurance organization- this is its ability to fulfill accepted insurance obligations when its activities are affected by unfavorable factors and changes in economic conditions.

Naturally, the insurer has external and internal obligations. It is customary to divide external obligations into insurance And non-insurance (others). Unless otherwise specifically stated, due to the special significance of insurance obligations, financial stability primarily means the ability of the insurer to fulfill its insurance obligations.

The financial stability of an insurance organization is ensured by: sufficient and paid-up authorized capital, correctly calculated insurance rates, insurance reserves adequate to accepted obligations, as well as an adopted reinsurance system. The use of the reinsurance system assumes that the responsibility of the direct insurer remains only those risks for which it can fulfill obligations based on its financial capabilities. The criterion for the financial stability of an insurer is usually considered to be the sufficiency of insurance reserves and its own available funds to fulfill the insurer’s obligations. The most important indicator of the financial stability of the insurer, its reliability, is solvency.

Solvency of an insurance company is its ability to fulfill its obligations at any given time.

As in the case of financial stability, when assessing solvency, it is usually, unless otherwise stated, that the company's ability to meet its insurance obligations is taken into account.

The condition on the insurer's solvency is more significant than the condition on financial stability, since it imposes an additional requirement on the company's assets. In addition to being sufficient, they must be liquid to the extent necessary to meet insurance obligations at any given time.

Assessment of the solvency of an insurance organization

Normative base

Regulations on the procedure for insurers to calculate the standard ratio of assets and insurance liabilities accepted by them, approved by Order of the Ministry of Finance of Russia dated November 2, 2001 No. 90n.

Financial support for the fulfillment of obligations for insurance payments for the insurer is the formed insurance reserves, as well as funds free from obligations, called net assets. The significance of the last element is due to the fact that due to the random nature of insurance, insurance reserves may not be enough to fulfill insurance obligations.

Since insurance reserves are calculated using special methods, and therefore their size is quite certain, assessment of the solvency of an insurance company can be reduced to sufficiency assessment the amount of the insurer's own available funds (net assets), which, together with the assets covering insurance reserves, are used to fulfill insurance obligations (Table 13.1).

Table 13.1

Ratio of assets and liabilities of the insurer

Note!

Assessing the solvency of an insurance organization comes down to assessing the sufficiency of its own available funds.

The excess of an insurer's assets over its liabilities represents the solvency margin (the insurer's net assets).

Solvency margin is the difference between the value of a company's total assets and its insurance liabilities.

The positive difference between all assets of the insurer and its liabilities is used to fulfill insurance obligations in the event of insufficient insurance reserves. The essence of the current methodology for assessing the solvency of an insurance organization comes down to comparing the actual size of the solvency margin (the actual size of the insurer's net assets) with its standard size, calculated according to the data of the insurance organization being assessed in accordance with the instructional materials.

The solvency assessment is carried out in three stages.

Stage 1. Calculation of the standard solvency margin (standard value of the insurer’s net assets), due to the specifics of concluded insurance contracts, as well as the volume of accepted and fulfilled obligations.

Note!

In economic terms, the standard solvency margin is the minimum amount of own available funds, which an insurance organization must have, taking into account accepted and fulfilled obligations.

In accordance with the current insurance legislation, an insurance organization can simultaneously engage in or types of personal insurance (life insurance; accident and illness insurance; medical insurance), or risk types of insurance (accident and illness insurance; medical insurance; all other types of property insurance).

For this reason, the calculation of the standard size of the solvency margin of an insurance organization is carried out in different ways.

Case 1. The insurance organization deals with types of personal insurance.

This means that it deals in life insurance and two or one of the following two risk types of insurance: accident and health insurance, health insurance.

Therefore, the total standard size of the solvency margin is calculated as the sum of two terms - for life insurance and types of insurance other than life insurance, respectively.

For life insurance, the private standard is calculated as a share of the life insurance reserve and is adjusted to take into account reinsurance.

Note!

According to Russian legislation, an insurance organization working with life insurance is solvent for this type of insurance if the actual amount of its own available funds exceeds the minimum that was found for the organization on the basis of the life insurance reserve, i.e. takes into account insurance obligations accepted and fulfilled by the insurer.

When calculating the private standard for types of insurance other than life insurance, two main factors are taken into account: the amount of insurance obligations accepted by the insurer (through the volume of insurance premiums) and the amount of insurance obligations fulfilled (through the volume of insurance payments made). The private standard also takes into account the insurer's participation in reinsurance.

Note!

• 1. According to Russian legislation, an insurance organization working with risky types of insurance is solvent for these types of insurance if the actual amount of its own available funds exceeds the minimum that was found for the organization, taking into account accepted (through premiums) and fulfilled (through payments) obligations .
• 2. In European insurance legislation, for types of insurance other than life insurance, an additional requirement is introduced: the minimum amount of the company’s own available funds must also take into account the specifics of the risks covered by the corresponding type of insurance.

The general standard size of the solvency margin for an insurance company engaged in life insurance is calculated as the sum of two found private standards.

Note!

The general solvency standard shows the minimum amount of own available funds that an insurance organization engaged in types of personal insurance must have.

Case 2. The insurance organization deals only with risk types of insurance.

In this situation, the standard solvency margin coincides with the solvency standard calculated for types of insurance other than life insurance.

If a company is engaged in life insurance and other types of insurance and the calculated standard size of the total solvency margin "N" is less than the minimum amount of the authorized capital provided by law, then the standard size "N" is set equal to this legally established amount of the authorized capital.

Stage 2.Determination of the actual size of the solvency margin – net assets.

According to Russian legislation, the actual size of the solvency margin is calculated as sum :

• authorized capital,
• additional capital,
• reserve capital,
• retained earnings of the reporting year and previous years, reduced :
• for uncovered losses of the reporting year and previous years,
• debt of shareholders (participants) for contributions to the authorized capital,
• the cost of own shares purchased from shareholders,
• intangible assets,
• overdue receivables.

According to European legislation, the actual amount of solvency will be calculated in almost the same way.

Stage 3.Comparison of the actual size of the solvency margin with the standard one.

If the actual solvency margin exceeds the standard by at least 30%, then it is concluded that the insurance organization is solvent. If the actual solvency margin exceeds the standard, but is less than 30% of the standard, then the insurance supervisory authorities exercise control over the financial recovery of the insurer. If the actual solvency margin is less than the normative one, the insurance company is insolvent.

Note!

The essence of assessing solvency is to compare the actual solvency margin with the normative one that corresponds to accepted, fulfilled and fulfilled insurance obligations.

In general, the insufficiency of insurance reserves for risky types of insurance is largely due to the manifestation of technical risks - those associated with the conduct of insurance operations. The impact of investment risks for these types of insurance is not significant, since the contracts are short-term and under them the insurer does not promise the policyholder to receive investment income. Non-technical risks are also not taken into account when determining the regulatory solvency margin. Therefore, assessing solvency for risky types of insurance, in essence, is an assessment of the sufficiency of the company’s own available funds to pay off the possible negative impact of the insurer’s technical risks.

The solvency of a life insurance company is significantly influenced not only by technical risks associated with insurance operations, but also by the insurer’s investment risks, therefore, assessing their solvency comes down to assessing the sufficiency of their own available funds to cover the possible negative impact of both technical and investment risks.

Under financial stability the insurance organization understands the ability to fulfill its obligations with all its available property. Naturally, the insurer has external and internal obligations. It is customary to divide external obligations into insurance and non-insurance (other). Unless otherwise specifically stated, due to the special significance of insurance obligations, financial stability is primarily understood as the ability of the insurer to fulfill its insurance obligations 1 .

The financial stability of an insurance organization is ensured by sufficient and paid-up authorized capital, insurance reserves adequate to accepted obligations, as well as an adopted reinsurance system. The use of the reinsurance system assumes that the insurer is responsible only for those risks for which it can fulfill obligations based on its financial capabilities. The criterion for the financial stability of an insurer is usually considered to be the sufficiency of insurance reserves and its own available funds to fulfill the insurer’s obligations. The most important indicator of the financial stability of the insurer, its reliability, is solvency.

Under solvency insurance company understands its ability to fulfill its obligations at any given time. As in the case of financial stability, when assessing solvency, it is usually, unless otherwise stated, understood as its ability to meet, first of all, insurance obligations.

The condition on the insurer's solvency is more significant than the condition on financial stability, since it imposes an additional requirement on the company's assets.

_______________________

1 Recently, in the global insurance market, the practice of selling not an insurance, but a so-called financial product, which, along with insurance, includes other services of a financial and credit nature, has been increasingly developing. For this reason, the importance of other (non-insurance) obligations of an insurance organization increases, which determines when assessing its financial stability and solvency, taking into account all external obligations, and not just insurance ones. The internal obligations of an insurance organization are not particularly specific.

In addition to the fact that they must be sufficient, they must be liquid to the extent necessary to fulfill insurance obligations at any time.

19.4. Assessment of the solvency of an insurance organization

Financial support for the fulfillment of obligations for insurance payments for the insurer is the formed insurance reserves, as well as own funds free from obligations, called net assets. The significance of the last element is due to the fact that insurance reserves, as a rule, are not enough to fulfill insurance obligations. This is explained primarily by the random nature of insurance payments and the fact that in its professional activities the insurer is constantly faced with technical, non-technical and investment risks (Fig. 19.3)

Since insurance reserves are calculated using special methods, and therefore their size is quite certain, assessing the solvency of an insurance organization can be reduced to assessing the sufficiency of the insurer’s own available funds (net assets), which, together with the assets covering insurance reserves, are used to fulfill insurance obligations ( fig. 19.4)

The excess of the insurer's assets over its liabilities confirms the presence solvency margin(net assets of the insurer) - the positive difference between all assets of the insurer and its liabilities, which is used to fulfill insurance obligations in the event of insufficient insurance reserves. The essence of the current methodology for assessing the solvency of an insurance organization comes down to comparing the actual size of the solvency margin (the actual size of the insurer's net assets) with its standard size, calculated according to the data of the insurance organization being assessed in accordance with the instructional materials.

The solvency assessment is carried out in three stages.

Stage 1. Calculation of the standard size of the solvency margin (the standard value of the insurer's net assets), due to the specifics of concluded insurance contracts, as well as the volume of obligations accepted for fulfillment.

Indicator P1 indicates the minimum amount of net assets that an insurance company must have based on its insurance obligations. It is calculated by the formula:

where PR is the amount of insurance premiums for the period for which solvency is assessed (usually one year) under insurance contracts, co-insurance and accepted for reinsurance, reduced by the annual amount of returned insurance premiums, deductions to the reserve of preventive measures and other deductions provided for by law.

Indicator P 2 indicates the minimum amount of net assets that an insurance company should have based on the insurance obligations it has fulfilled. It is calculated by the formula:

where SV is the sum of the average annual changes over the previous three years in loss reserves and actual insurance payments under insurance contracts, co-insurance and accepted for reinsurance, minus payments received under recourse claims.

The adjustment factor k vyp is calculated for the year preceding the reporting date as the ratio of the amount of net insurance payments (total payments minus the participation of reinsurers) and net changes in loss reserves (total changes minus the participation of reinsurers) to the total amount of insurance payments of changes in loss reserves. In the case when the actual value of the coefficient does not exceed 0.5, its value is assumed to be 0.5; if there was no reinsurance, the coefficient is 1.

For life insurance, the standard size of the NSG solvency margin is calculated using the formula:

where RSL is the life insurance reserve as of the last reporting date; k is an adjustment factor calculated as the ratio of the life insurance reserve minus the participation of reinsurers to the amount of the specified reserve. In the case when the actual value of the coefficient is less than 0.85, its value is taken equal to 0.85; if there was no reinsurance, the coefficient is 1.

The standard size of the general solvency margin H is calculated using the formula:

If a company is engaged in life insurance and other types of insurance and the calculated standard size of the solvency margin N is less than the minimum amount of the authorized capital provided for by law, N is set equal to this legally established value.

Stage 2. Determination of the actual size of the solvency margin of PLF - net assets.

According to Russian legislation, the actual size of the solvency margin, which indicates actual solvency, is calculated using the formula:

Mpf = (UK + DC + RK + NP) - (NU + ZA + AP + NA + DZP), where MC is the authorized capital; DC-additional capital; RK-reserve capital; NP - retained earnings of the reporting year and previous years, NU - uncovered losses of the reporting year and previous years; FOR - debt of shareholders (participants) for contributions to the authorized capital; AP - own shares purchased from shareholders; NA - intangible assets; DRP - overdue accounts receivable.

Stage 3. Comparison of the actual size of the solvency margin with the standard one.

If the actual solvent standard is N, that is, if the ratio PLf ≥ N is observed, we can conclude that the insurance organization is solvent. Otherwise, control over the financial recovery of the insurer; carried out by supervisory authorities over insurance activities.

Within the European Union, solvency assessment is carried out separately for insurance companies engaged in risk types of insurance and insurance companies engaged in life insurance. The Russian Federation's accession to the WTO and the European Union presupposes, in particular, that the assessment of the solvency of Russian insurance companies should be brought into line with European and world standards.

Under financial stability An insurance company understands the stability of its financial position, ensured by a sufficient share of equity capital (net assets) as part of the sources of financing. The external manifestation of the financial stability of an insurance organization is its solvency, which, in turn, should be understood as the ability of the insurer to fulfill obligations to pay the insured amount or insurance compensation to the policyholder or insured person under insurance contracts.

In accordance with Ch. 3 of the Insurance Law, which determines the procedure for ensuring the financial stability of insurers in the Russian Federation, guarantees for ensuring the financial stability of insurance companies are:

• economically justified insurance rates;
• insurance reserves sufficient to fulfill obligations under insurance, coinsurance, reinsurance, mutual insurance contracts;
• own funds;
• reinsurance system.

Insurers' own funds include authorized capital, reserve capital, additional capital, and retained earnings. Sufficient size authorized capital ensures the financial stability of the company at the time of its creation and for the initial period of activity, when the volume of insurance premium receipts is small. The minimum amount of authorized capital is determined by current legislation and the constituent documents of the company. It can be used both to ensure statutory activities and to cover the costs of insurance payments in the event of insufficient insurance reserves and insurance proceeds.

The next condition for ensuring financial stability is creation of insurance reserves and funds, which reflect the amount of the insurer’s unfulfilled obligations for insurance payments at a given time.

The obligation of insurers to form insurance reserves is enshrined in the Insurance Law. In accordance with it, insurers form, from the insurance premiums received, the insurance reserves necessary for upcoming insurance payments for personal insurance, property insurance and liability insurance.

It should be noted that if an insurance company provides several types of insurance, then reserves for each type are formed separately.

Insurance reserves must be formed and placed in accordance with the rules approved by the Federal Financial Markets Service of Russia by the following regulations:

• 1) Order of the Ministry of Finance of Russia dated July 2, 2012 No. 100n “On approval of the Procedure for the placement of insurance reserve funds by insurers”;
• 2) Order of the Ministry of Finance of Russia dated October 18, 2002 No. 24-08/13 “On Examples of calculation by insurers of the reserve for occurred but unreported losses and the stabilization reserve.”

The insurer has the right to form insurance reserves in accordance with the regulatory guidelines contained in the above-mentioned regulations, as well as in agreement with the Ministry of Finance of the Russian Federation in cases provided for by the Rules for the formation of insurance reserves for insurance other than life insurance, approved by order of the Ministry of Finance of Russia dated June 11, 2002 No. 51n, may calculate other insurance reserves and (or) use other methods for their calculation. The composition of insurance reserves is shown in Fig. 3.2.

Rice. 3.2.

The next factor ensuring the financial stability of the insurer is compliance with the normative relationship between assets and assumed liabilities.

Insurers are required to comply with the regulatory relationships between assets and insurance liabilities assumed by them in the amount of the so-called standard solvency margin. The methodology for calculating these ratios and their standard values ​​are established by the Federal Body for Supervision of Insurance Activities in accordance with the Regulations on the procedure for calculating by insurers the standard ratio of assets and insurance liabilities assumed by them, approved by Order of the Ministry of Finance of the Russian Federation dated November 2, 2001 No. 90n. This methodology does not apply to medical insurance organizations in terms of compulsory medical insurance operations.

The normative ratio between the assets of the insurer and the insurance liabilities assumed by it (the normative size of the solvency margin) is understood as the value within which the insurer, based on the specifics of the concluded contracts and the volume of accepted insurance liabilities, must have its own capital, free from any future obligations, with the exception of rights claims of the founders, reduced by the amount of intangible assets and receivables whose repayment terms have expired (the actual size of the solvency margin).

The essence of the current methodology for assessing the solvency of an insurance organization comes down to comparing the actual size of the solvency margin with the standard size, calculated according to the data of the insurance organization being assessed in accordance with the said provision.

Actual Margin Size The solvency of the insurer is calculated as the amount:

• authorized capital;
• additional capital;
• reserve capital;
• retained earnings of the reporting year and previous years;
• reduced by the amount:
• – uncovered losses of the reporting year and previous years;
• – debt of shareholders (participants) for contributions to the authorized capital;
• – own shares purchased from shareholders;
• – intangible assets;
• – accounts receivable whose repayment terms have expired.

The standard margin is calculated on the basis of the Regulations on the procedure for calculating by insurers the standard ratio of assets and insurance liabilities assumed by them separately for life insurance and for insurance other than life insurance.

The standard size of the insurer's solvency margin for insurance other than life insurance is equal to the largest of the two indicators considered below, multiplied by the correction factor.

The first indicator is an indicator that is calculated on the basis of insurance premiums (contributions) for the 12 months preceding the reporting date. This indicator is equal to 16% of the amount of insurance premiums (contributions) accrued under insurance contracts, co-insurance and reinsurance contracts for the billing period, reduced by the amount:

• insurance premiums (contributions) returned to policyholders (reinsurers) in connection with the termination (change of conditions) of insurance contracts, co-insurance and contracts accepted for reinsurance for the billing period;
• deductions from insurance premiums (contributions) under insurance contracts, coinsurance to the reserve of preventive measures for the billing period;
• other deductions from insurance premiums (contributions) under insurance contracts, coinsurance in cases provided for by current legislation, for the billing period.

The second indicator is an indicator calculated on the basis of insurance payments; the calculation period for its calculation is three years (36 months) preceding the reporting date. This indicator is equal to 23% of 1/3 of the amount:

• insurance payments actually made under insurance contracts, co-insurance and accrued under contracts accepted for reinsurance, minus the amounts of proceeds associated with the implementation of the right of claim transferred to the insurer, which the insured (insured, beneficiary) has against the person responsible for losses compensated in the result of insurance for the billing period;
• changes in the reserve of declared, but unresolved losses, and the reserve of occurred, but undeclared losses, under insurance contracts, co-insurance and contracts accepted for reinsurance, for the billing period.

An insurer that has received less than three years (36 months) from the moment it first received a license to carry out insurance other than life insurance in accordance with the established procedure until the reporting date does not calculate the second indicator.

The calculation period for calculating the adjustment factor is the year (12 months) preceding the reporting date. The adjustment coefficient is defined as the ratio of the sum of: insurance payments actually made under insurance contracts, co-insurance and accrued under contracts accepted for reinsurance, minus the accrued share of reinsurers in insurance payments for the billing period; changes in the reserve of declared but unsettled losses, and the reserve of occurred but undeclared losses, under insurance contracts, co-insurance and contracts accepted for reinsurance, minus changes in the share of reinsurers in these reserves for the billing period; to the amount (not excluding the share of reinsurers): insurance payments actually made under insurance contracts, co-insurance and accrued under contracts accepted for reinsurance for the billing period; changes in the reserve of declared, but unresolved losses, and the reserve of occurred, but undeclared losses, under insurance contracts, co-insurance and contracts accepted for reinsurance, for the billing period.

If there are no insurance payments in the calculation period under insurance contracts, co-insurance contracts and contracts accepted for reinsurance, the adjustment factor is taken equal to 1.

If the correction factor is less than 0.5, then for calculation purposes it is taken equal to 0.5, if more than 1 - equal to 1.

An insurer that has received less than a year (12 months) from the moment it first received a license to carry out insurance other than life insurance in accordance with the established procedure until the reporting date, uses the period from the moment it received the license to the reporting date as the calculation period when calculating the adjustment factor.

If actual data on operations for a type of compulsory insurance for at least three years indicate stable positive financial results for each year for the specified type of insurance and if the amount of insurance premiums (contributions) for this type of insurance is at least 25% of the amount of insurance premiums (contributions) for insurance other than life insurance, then, in agreement with the Federal Financial Markets Service of Russia, the percentage amounts used to calculate the first and second indicators for this type of insurance can be used in amounts less than that provided for in the above Regulations, but not less 2/3 of the established values.

The standard size of the solvency margin of an insurer providing life insurance and non-life insurance is determined by adding the standard size of the solvency margin for life insurance and the standard size of the solvency margin for non-life insurance.

If the standard size of the insurer's solvency margin is less than the minimum amount of the authorized (share) capital established by Art. 25 of the Insurance Law, then the legally established minimum amount of the authorized capital is taken as the standard size of the insurer's solvency margin.

If at the end of the reporting year the actual size of the insurer's solvency margin exceeds the standard size of the solvency margin by less than 30%, the insurer submits a financial improvement plan for approval to the Ministry of Finance of the Russian Federation as part of the annual financial statements. This plan may include changing the size of the authorized capital, expanding reinsurance operations, changing the tariff policy, reducing accounts receivable and payable, changing the structure of assets, as well as the use of other methods of maintaining solvency that do not contradict the legislation of the Russian Federation.

The ratio between the actual and standard solvency margins is calculated by the insurer on a quarterly basis.

Another important condition for ensuring the financial stability of insurance organizations is use of the reinsurance system.

Transferring part of the risks to reinsurance allows us to solve a number of important problems, including stabilization of the insurer’s performance results over a long period in the event of negative results for the entire insurance portfolio throughout the year; expanding the scale of activity (taking on a large number of risks) and increasing competitiveness; protection of your own assets under unfavorable circumstances. However, the insurance organization must evaluate the economic efficiency of this solution.

The advantage of reinsurance is that the insurer, reinsuring the risks assumed, creates additional guarantees of its financial stability. Consequently, the policyholder receives additional confidence in full and timely compensation for damage.

After studying Chapter 18, the student will:

know

• basics of financial stability of an insurance company;
• the concept of solvency of an insurance company;
• main legislative and regulatory acts establishing requirements for the financial stability and solvency of an insurance company;

be able to

• characterize the main indicators of the insurer’s financial stability;
• determine the minimum amount of authorized capital of insurers of various specializations;
• distinguish between the concepts of “solvency” and “financial stability”;
• determine the standard and actual size of the insurer's solvency margin;

have an idea

• on the analysis of the financial condition of the insurance organization;
• on calculating the degree of shortage of funds of the insurance company, the level of profitability of its work and the level of profitability of insurance premiums;
• on assessing the solvency of the insurance company.

Financial stability of the insurance organization

Financial stability of the insurer- this is the ability of the insurer to fulfill its obligations to all entities in a timely manner and to the prescribed extent at the expense of its own and borrowed funds. The basis for the financial stability of insurers are:

• 1) economically justified insurance rates;
• 2) insurance reserves sufficient to fulfill obligations under insurance, coinsurance, reinsurance, mutual insurance contracts;
• 3) own funds;
• 4) reinsurance.

Insurers (with the exception of mutual insurance companies) must own a fully paid-up authorized capital, the amount of which must not be lower than the minimum amount of authorized capital established by the Insurance Law.

Thus, the financial stability of the insurer is achieved:

• increasing the authorized capital and other own funds of the insurance organization;
• the use of correctly calculated, differentiated and sufficiently flexible insurance rates;
• the formation, in accordance with the procedure established by regulatory and methodological documents, of insurance reserves that guarantee insurance payments;
• compliance with the maximum liability standard of the insurer for a particular risk;
• reinsurance, co-insurance of major risks;
• compliance with the standard size of the ratio between the assets and liabilities of the insurer;
• reduction of receivables and payables.

There are certain indicators that allow you to evaluate

financial condition of the insurance organization. Depending on their values, four states of the organization’s finances are distinguished:

• sustainable;
• unstable;
• borderline;
• financial insolvency.

When the minimum acceptable values ​​of financial stability indicators are reached, a further reduction in financial resources may lead to insolvency and bankruptcy of the insurance organization.

The state of an organization's finances is characterized by certain characteristics, such as solvency, liquidity, deviations from financial standards, balance sheet structure, and degree of adaptation to the environment. The extreme points of the financial condition of an insurance organization are financial stability and insolvency. In addition, two more transition states are distinguished: unstable and borderline (threshold).

If an insurance organization cannot make insurance payments, payments to the budget and current payments, then its financial condition is defined as borderline. This condition is threshold, since after this, reorganization or bankruptcy are possible. Financial insolvency is characterized by the absence of all signs of financial stability. Rehabilitation is considered as a variant of this condition, allowing for the restoration of financial stability.

The financial stability of an insurance organization is influenced by both external and internal factors. External factors include such parameters of the external environment that the organization cannot change and is forced to adapt to them. In management, external factors are considered as “framework” conditions, i.e. restrictions taken into account when mobilizing internal resources and forming the financial and economic policy of the organization. External factors include the general state of the national economy, the legislative framework, the current taxation system, forms of state regulation of insurance activities, conditions in the insurance and financial markets, solvency and consumer preferences of the population, etc.

TO internal factors ensuring financial stability include the insurance company's own characteristics, which in principle can be controlled by it. Internal factors include the nature of the insurance company's specialization, organizational structure, balance of the insurance portfolio, tariff, reinsurance and investment policies, etc. Internal capabilities must be used in such a way as to effectively counteract negative influences and take full advantage of the favorable effects of external factors.

Achieving financial sustainability in the insurance industry is somewhat different from what is being done to achieve this goal in other sectors of the economy. A non-insurance organization, using raised funds, usually knows exactly when and how much it needs to pay its business partners.

In insurance organizations the situation is different. The insurer forms the bulk of its assets from borrowed funds. However, he can estimate the timing and size of upcoming payments to policyholders only with a certain probability. In this regard, when fulfilling its obligations, the insurer focuses not only on the funds of insurance reserves, specifically intended for making insurance payments, but also on its own funds, free from fulfilling other obligations.

In accordance with paragraph 3 of Art. 25 of the Law “On the Organization of Insurance Business in the Russian Federation”, insurers must have fully paid-up authorized capital, the amount of which must not be lower than the minimum amount of authorized capital established by law. The minimum size of the authorized capital (UK t|p) of the insurer is determined on the basis of the basic size of its authorized capital (UKb az) and coefficients (To), established depending on the specialization of insurers on insurance objects and their combination:

To - 1 - for insurance against accidents and illnesses, medical insurance; To= 1 - for insurance against accidents and illnesses, medical insurance, property insurance, civil liability insurance, business risk insurance; k = 2 - for life insurance; k = 2 - for life insurance, accident and illness insurance, medical insurance; k - 4- for the implementation of reinsurance, as well as insurance in combination with reinsurance.

From January 1, 2012, the minimum authorized capital of an insurance organization was increased to 120 million rubles. taking into account the current coefficients (previously it was 30 million rubles). The basic amount of the authorized capital of an insurer providing exclusively medical insurance is set at 60 million rubles.

BASIC CONCEPTS: solvency; financial stability of the insurer; guarantees of financial stability of the insurer; the actual size of the solvency margin; standard size of the solvency margin; solvency reserve.

The concept of solvency of insurance organizations. Factors of financial stability of insurers

Financial stability of the insurance organization- this is the insurer’s ability to fulfill its obligations to its counterparties in any unfavorable situation, both in the present and in the future, i.e. such a property and financial condition in which the size and structure of own And funds equivalent to them, liquid assets, which are a consequence of the degree of perfection of the organization of insurance, the development of its new types, as well as the mass scale of effective insurance operations and the savings regime, ensure at any time a certain level of solvency. Financial stability is determined by structural (the amount of equity and liabilities) And dynamic (organizational performance) indicators. Thus, financial stability essentially expresses the financial potential of the insurer. Consequently, the financial stability of an insurance organization can be defined as the potential ability of the insurer to pay off its obligations, taking into account the structure of its own funds and liabilities. The level of financial stability can be low (insufficient) or high (sufficient).

Let's consider the indicators used to assess the financial potential and financial stability of an insurance organization. Article 25 of the Law on the Organization of Insurance Business in the Russian Federation defines the following factors (guarantees) ensuring the financial stability of the insurer: economically justified insurance rates, insurance reserves sufficient to fulfill obligations under insurance contracts, coinsurance, reinsurance, mutual insurance; own funds; reinsurance. However, insurance practice makes it possible to expand the list of factors that ensure the financial stability of the insurer, adding to those listed also the positive results of the investment policy (Fig. 7.1). Let's take a closer look at the highlighted factors.

• 1. Insurance reserves are one of the most important factors in the financial stability of insurance companies. They reflect the amount of the insurer’s currently unfulfilled obligations under the contracts it has concluded with policyholders. It is important that the amount of insurance reserves fully covers the amount of upcoming payments under existing insurance contracts. The adequacy of the insurer's insurance obligations and the size of insurance reserves is planned when calculating tariffs. However, it is not always possible, especially in “new types of insurance,” to accurately assess the probability of the occurrence of insured events, which leads to either a shortage or an excess of the insurance fund. Therefore, insurance reserves cannot be the only guarantor of the solvency of an insurance organization.
• 2. Own capital (own funds) is an additional guarantee of financial stability. However, this source loses its importance with the growth of the volume of insurance transactions. Own funds of insurers (with the exception of mutual insurance companies that provide insurance exclusively to their members) include authorized capital, reserve capital, additional capital, and retained earnings.
• 3. Reinsurance. The cost of individual insurance items reaches significant amounts. Accepting such objects for insurance also seems dangerous for the financial stability of the insurer, since covering large losses may require the complete withdrawal of insurance reserves and equity capital. Moreover, the financial stability of the insurer is threatened not only by large risks, but also by their cumulation. There is a need for reinsurance. Reinsurance performs the function of stabilizing the insurance market by redistributing risks between its participants.

Rice. 7.1.

At the same time, we must not forget that the obligation to pay insurance compensation (security) is borne by the insurer who has entered into an insurance agreement with the insured, despite the fact that the risk is reinsured. Reinsurers reimburse their share of the risk to the reinsurer, as a rule, after the reinsurer has fulfilled its obligations to the policyholder.

4. Investment policy. Insurance reserves and the insurer's own funds must be provided with assets that meet the requirements of diversification, liquidity, repayment and profitability.

The investment policy of insurance organizations in relation to assets, the source of which are insurance liabilities, is regulated by the state. This refers to the composition and quality of assets accepted to cover these liabilities. We discuss the mechanism of state regulation in this area in a separate lecture. Here we note that the implementation of the principles of investment activity of insurers, provided for by law, helps to reduce investment risks and makes it possible to obtain additional income from the use of investment resources of the insurance organization, which helps strengthen its financial stability.

5. Tariff policy. Optimization of the insurer's tariff policy is also relevant from the point of view of ensuring its financial stability. The insurance rate, or gross rate, consists of a net rate and a load. The net rate serves to form an insurance fund. The load is intended to finance the costs of running the business, as well as making a profit. It is the correct calculation of the net rate that determines the financial stability of the insurer.

Thus, we see that these factors complement each other. Each of them is important in its own way and has a direct impact on the financial stability of the insurer.

Solvency- the ability of an economic entity to pay the claims of creditors for previously accepted obligations. For the insurer, these claims are primarily related to claims obligations. It is the ability to timely and fully fulfill obligations under insurance contracts, i.e. stable solvency is the most important criterion for public assessment of the insurer’s performance. The solvency of an insurance organization depends on its financial position, characterized by financial stability.

The state imposes special requirements on the solvency of insurance organizations. What caused this? Insurance organizations, providing damage coverage, are a stabilizer of the market as a whole. In this sense, insurance can be called a socially oriented industry. At the same time, there are certain objective circumstances that may prevent insurers from fulfilling their obligations:

• ? limited liability of insurers due to legal reasons. Indeed, the financial resources of insurers are limited only by the funds of the insurance organization. The liability of participants (shareholders) of an insurance company is limited to the size of their share (shares). Because of this, the bankruptcy of an insurance organization is fraught with financial losses not only for its founders, participants (shareholders), but also for policyholders;
• ? the presence of investment and financial risks in the activities of insurance organizations;
• ? probabilistic nature of insurance obligations.

Along with the specified factors of solvency at work

Professor L.A. Orlanyuk-Malitskaya 1 is indicated as the balance of the insurance portfolio. The impact of the structure of the insurance portfolio on solvency and stability is discussed in more detail in a separate paragraph of this chapter.

The factors determining the solvency of the insurer are also described by the model of financial flows of the insurance organization. Paragraph 2.3 of this manual examined the movement of cash flows (inflow/outflow) as a result of the current, investment and financial activities of the insurer. The constructed diagram of the insurer's flows fully describes only monetary transactions, not taking into account offset ones (for example, in reinsurance). At the same time, it covers the main financial flows and is also convenient for analysis due to the fact that this information is disclosed in Form No. 4 “Cash Flow Statement” of the financial statements.

In Russia, as in many other countries, the solvency of insurers is the subject of close attention from government agencies that monitor insurance activities. In particular, insurance organizations are required to report on their solvency to the Bank of Russia Financial Markets Service twice a year. Below we will consider the Methodology for assessing the ratio of assets and accepted insurance liabilities (approved by Order of the Ministry of Finance of Russia dated November 2, 2001 No. 90n), which allows us to assess the solvency of insurance organizations.

• Orlanyuk-Matskaya L.A. Solvency of insurance organizations. M.: ANKIL, 1994.
• Right there.
• Order of the Ministry of Finance of Russia dated November 2, 2001 No. 90n “On approval of the regulations on the procedure for insurers to calculate the standard ratio of assets and insurance liabilities assumed by them”; Order of the Ministry of Finance of Russia dated July 27, 2012 No. 109n “On accounting (financial) reporting of insurers.”