What is What in C-ROSS ? The New Solvency Method

China launched a new Solvency methodology known as China Risk Oriented Solvency System (C-ROSS) which is adopted by almost all the Chinese insurance companies from the beginning of 2016. Everyone knows what are the definitions and details of the new pillars describe by this regime. I'm writing in here to clarify the main confusion that I've heard from lot of analysts that what would be the Solvency Ratio (%) and its main components based on this new regime.

So, this blog will show the reporting style of the new Basel Reports that provides the Solvency details and will answer the following questions:

1. What is Core Solvency Margin Ratio?
2. What is Core Capital - Tier 1 ?
3. What is Comprehensive Margin Ratio?
4. What is Actual and Required Capital under C-ROSS?

So the answers to all these questions are that the "Comprehensive Solvency Margin Ratio(%)" is actually based on this new methodology i.e. C-ROSS. Please it as under:

 As you all know that:

Solvency Ratio = (Actual Capital / Required Capital) * 100

Now try to apply the above formula by picking up the values encircled in the below image and you'll get the above Ratio:

So in the above image, if you pick up the green highlighted values then you will get the Comprehensive Solvency Margin Ratio:

Comprehensive Solvency Margin Ratio = (27,873,248 / 9,9573,969)*100
                                                                = 291.12%
                                                                = 291%

Core tier-1 Capital and Core Solvency Margin is actually the components or indicators of the old Solvency method provided by CIRC.

Hope it will help. Please write in your feedback if there is any. Thanks