What Does Economic Capital Mean?

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What does Economic Capital mean? Read on to discover the definition & meaning of the term Economic Capital - to help you better understand the language used in insurance policies.

Economic Capital

Economic Capital

Market value of assets minus fair value of liabilities. Used in practice as a risk-adjusted capital measure; specifically, the amount of capital required to meet an explicit solvency constraint (e.g., a certain probability of ruin).

We hope the you have a better understanding of the meaning of Economic Capital.

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