A strong capital base
Solvency II regulations have been designed to help insurance businesses, such as Royal London, calculate their available capital (which is broadly assets minus liabilities), assess and manage their risks and ensure that they hold sufficient capital to take account of those risks.
Royal London is very well capitalised with a solvency ratio of 224% (as at 31 December 2020).
This shows that as well as having enough capital to pay all our liabilities, including predicted future claims, we have 2.24 times the capital required under Solvency II rules.
Solvency and Financial Condition Report (SFCR)
As our 2020 Solvency and Financial Condition Report (SFCR) highlights:
"As the Company is very strongly capitalised and is not exposed to market risks to any material extent, it would take an extreme event to reduce its capital coverage to the sub optimal level or below."
Standard & Poor’s reaffirmed our parent company's A ratings for financial strength and stability in June 2021, as did Moody's in December 2020. *
* Our parent company, The Royal London Mutual Insurance Society Ltd. received an A (Stable) Counterparty Credit Rating from Standard & Poor’s in June 2021 and an A2 (Stable) Insurance Financial Strength Rating from Moody’s in December 2020.