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 233% (as at 31 December 2019).
This shows that as well as having enough capital to pay all our liabilities, including predicted future claims, we have 2.33 times the capital required under Solvency II rules.
Solvency and Financial Condition Report (SFCR)
As our 2019 Solvency and Financial Condition Report (SFCR) highlights:
"We are very strongly capitalised and not exposed to market risks to any material extent, it would take an extreme event to reduce our capital coverage to the sub optimal level or below."
In 2020, Standard & Poor’s (June) and Moody’s (December) reaffirmed our A ratings for financial strength and stability.*
These ratings take account of the market volatility earlier in 2020 and are further evidence of our strong capital position.
* Our parent company, The Royal London Mutual Insurance Society Ltd. received an A (Stable) Counterparty Credit Rating from Standard & Poor’s in June 2020 and an A2 (Stable) Insurance Financial Strength Rating from Moody’s in December 2020.
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