Glossary
C
capital consolidation
Netting of the purchase costs with the proportionate equity capital of a subsidiary.
capital, reserves and underwriting provisions
An insurer's capital and reserves, including the provisions committed to underwriting business and the (claims) equalization reserve. Total maximum funds available to offset liabilities.
cash flow
Denotes the inflow of liquid funds within a certain period and facilitates assessment of internal financing.
cash flow hedges
Derivatives can be used to hedge against fluctuations in future cash flows; e.g. the interest-rate risk in the case of commitments with floating interest rates. Hedging via an interest rate swap (conversion of the floating-rate commitment to a fixed-rate commitment) would constitute a "cash flow hedge" in the scenario described.
cash flow statement
Statement on the origin and utilization of cash and cash equivalents during the accounting period. It shows the changes in liquid funds separated into cash flows from operating, investing and financing activities.
catastrophe bond
Short: cat bond. Transfer catastrophe risks of a (re)insurer to the capital market.
cedant (also: ceding company)
Direct insurer or reinsurer which passes on (cedes) shares of its insured or reinsured
risks to a reinsurer in exchange for a premium.
claims and claims expenses (net)
Sum total of paid claims and provisions for loss events that occurred in the financial year; this item also includes the result of the run-off of the provisions for loss events from previous years, in each case after deduction of own reinsurance cessions.
co-insurance
Participation of several insurers in one risk with each insurer assuming a certain amount of the sum insured.
combined ratio
Total of the loss ratio and expense ratio; can be calculated on a gross or net basis.
commission
Remuneration paid by a primary insurer to agents, brokers and other professional
intermediaries.
compliance
Statutory regulations and undertaking-specific rules governing the responsible and lawful actions of an undertaking and its employees.
composite insurer
Insurance undertaking that transacts multiple lines of insurance.
confidence level
Defines the probability with which a defined risk amount will not be exceeded.
consolidation
In the context of a consolidated financial statement: combining of the individual financial statements of several companies belonging to one group into a consolidated financial statement.
convexity
The correlation between changes in interest rates and bond prices is not linear, but convex. Convexity is a measure of the curvature of this interest-rate/bond-price curve and facilitates accurate determination of the price change in the event of appreciable interest rate changes.
Corporate Governance
System that serves to ensure responsible management and supervision of enterprises and is intended to foster the trust of investors, clients, employees and the general public in companies.
credit status
Also creditworthiness. Ability of a debtor to meet its payment commitments.
critical illness cover
Personal riders on the basis of which parts of the sum insured which would otherwise only become payable on occurrence of death are paid out in the event of previously defined severe illnesses.
