Insurance Glossary

A

ALDA: Alternative Long-Duration Assets.

APAC: Asia-Pacific

ASEAN: The Association of Southeast Asian Nations, commonly as ASEAN, is a political and economic union of 10 states in Southeast Asia.

Anglo Markets: UK, Ireland, Australia

APE: The Annual Premium Equivalent(APE) is the sum of the total value of regular–or recurring–premiums plus 10% of any new single premiums written for the fiscal year.

ANB: Age Next Birthday

B

BBA: Building Block Approach
Also referred to as ‘General Measurement Model’, compulsory measurement model for long-term non-participating business

BOP: Business Operating Profit 营业利润
It refers to the profit a company makes from its core operations, excluding any income or expenses related to non-operating activities such as investment gains, interest, taxes, and extraordinary items.

C

CoR: Combined Ratio 承保成本比率
It is a key financial metric used to assess the profitability and efficiency of an insurance company’s underwriting activities. The combined ratio is calculated by adding together the loss ratio and the expense ratio.

L o s s R a t i o = \frac{C l a i m s I n c u r r e d}{P r e m i u m s E a r n e d} \times 100

E x p e n s e R a t i o = \frac{O p e r a t i n g E x p e n s e}{P r e m i u m s E a r n e d} \times 100

C o R = L o s s R a t i o + E x p e n s e R a t i o

CoR < 100%: It means the insurer is making an underwriting profit
CoR = 100%: It means the insurer breaks even on its underwriting
CoR > 100%: It means the insurer is losing money on its underwriting activities.

CAGR: Compound Annual Growth Rate

CSM: Contractual Service Margin
The CSM represents the expected profit an insurer expects to make from an insurance contract over its term, and it is calculated as the difference between the expected future cash inflows (premiums) and the expected future cash outflows (claims and expenses), discounted to present value.
The amortization of CSM refers to the process of recognizing the profit embedded in the CSM over time under IFRS17.

CSM release: a portion of CSM stock net of reinsurance at the end of the defined period flowing through profit and loss representing the estimated profit earned by the insurer for providing insurance services during the reporting period

CLTV: Customer Lifetime Value 客户终身价值

E

EMEA: Europe, the Middle East, and Africa

F

FCF: Fulfillment Cash Flows 履约现金流
The expected future cash inflows and outflows related to the insurance contract, including:

Expected claims, benefits, and expenses
Premiums received
Time value of money (discounting future cash flows)

G

GWP: Gross Written Premium 总承保保费
The total premium income that an insurance company receives from policyholders in a given period before deductions for reinsurance, cancellations, or refunds.

L

L&S: Life & Savings 人寿与储蓄

M

MDRT: Million Dollar Round Table 百万圆桌

Middle Market: 中型企业
It refers to a segment of the economy that consists of companies that are larger than small businesses but not as large as large corporations.

N

NB: New Business

NBV: New Business Value
The value of newly issued contracts during the current year. It consists of the sum of

(i) the new business contractual service margin,
(ii) the present value of the future profits of short-term newly issued contracts during the period, carried by Life entities, considering expected renewals,
(iii) the present value of the future profits of pure investment contracts accounted for under IFRS 9,

net of

(iv) the cost of reinsurance,
(v) taxes and
(vi) minority interests

NBP: The New Business Premium (NBP) refers to the premium acquired from new policies sold by an insurance company within a specific reporting period. It is a key performance indicator for insurance companies, highlighting the success of their sales and marketing efforts, and their capacity to grow and attract new customers.

NWP: Net Written Premium 净承保保费

NPS: Net Promoter Score
It measures customer loyalty and satisfaction with the brand or company as a whole, typically through an annual or quarterly survey.

tNPS: Transactional Net Promoter Score
It measures customer satisfaction with a specific interaction or event, such as a service call, purchase, or delivery.

NRR: Net Revenue Retention or NDR(Net Dollar Retention)
It looks at the revenue generated from existing customers, excluding any new customers acquired during the period.

N R R = \frac{S t a r t i n g R e v e n u e + E x p a n s i o n R e v e n u e - C h u r n e d R e v e n u e}{S t a r t i n g R e v e n u e} \times 100

NIAS: Net income attributable to shareholders

Nat Cats: Natural Catastrophes
It refers to significant natural disasters such as earthquakes, floods, hurricanes, and other severe weather events that cause widespread damage and loss. T

O

o/w: Of Which
o/w Property & Casualty

P

PAA: Premium Allocation Approach 保费分摊法
A simplified approach for short-term contracts (e.g., one-year policies).

P&C: Property and Casualty Insurance 财产与意外保险

PML: Probable maximum loss

PIF: Policies in Force
It refers to the total number of insurance policies that are currently active or in effect with an insurer at any given time.

PPI: Payment Protection Insurance (支付保护保险), Credit Protection insurance(信用保护保险)
It is a a type of insurance product that was designed to cover an individual's loan, credit card, or mortgage payments in case they are unable to meet those payments due to specific circumstances, such as illness, accident, unemployment, or disability.

PVNBP: Present Value of New Business Premiums

PVEP: Present value of expected premiums 预期保费的现值

PYD: Prior Year Development
It refers to the changes in the estimated liabilities for claims from prior years that are reported in the current year.

R

RA Release: Release of Risk Adjustment(RA)
Under IFRS 17, the Risk Adjustment (RA) is a liability that an insurance company recognizes to reflect the uncertainty regarding the amount and timing of future cash flows associated with an insurance contract.
The RA Release refers to the gradual recognition or reduction of the Risk Adjustment liability as the insurer provides services and the uncertainty related to the cash flows diminishes over time.

S

SME: Small and Medium-sized Enterprises.

SST: Solvency Stress Test
It refers to a process where insurers and other financial institutions test the resilience of their capital and operations under stressed scenarios or adverse economic conditions.

Solvency II ratio: 偿付能力II标准比率

S o l v e n c y I I R a t i o = \frac{O w n F u n d s}{S o l v e n c y C a p i t a l R e q u i r e m e n t (S C R)} \times 100 %

Own Funds: This refers to the eligible capital of an insurance company, evaluated based on the Solvency II Economic Balance Sheet, where assets and liabilities are valued at market prices.
Solvency Capital Requirement (SCR): This is the minimum amount of capital required for an insurer to maintain a 99.5% confidence level that it can cover all but the most extreme risks over a one-year period. The SCR is calculated using either a standard formula or an approved internal model.

According to the model, a Solvency Ratio of 100% corresponds to a 0.5% probability of default over a 12-month period. However, for Solvency Ratios other than 100%, there is no distinct link to the probability of default. This can lead to unexpected outcomes.

We shouldn’t forget about the volatility of model outputs, which can be quite sensitive to small changes in certain parameters, some of which are beyond the control of companies (such as interest rates or the value of the stock portfolio on the measuring date).

SSA: Strategic Asset Allocation 战略资产配置

T

Technical Results
Technical results (also known as underwriting results or insurance results) refer to the profit or loss generated from the core insurance operations, excluding investment income and other non-operational revenue sources.

T e c h n i c a l R e s u l t = N e t E a r n e d P r e m i u m s - C l a i m s I n c u r r e d - O p e r a t i n g E x p e n s e s

TAA: Tactical Asset Allocation 战术资产配置

U

Underlying earnings
Underlying Earnings are a financial metric used to provide a clearer picture of the company's recurring profitability by excluding non-recurring items.

U n d e r l y i n g E a r n i n g s = N e t P r o f i t - O n e - O f f G a i n s / L o s s e s - V o l a t i l e I n v e s t m e n t G a i n s / L o s s e s - E x c e p t i o n a l C a t a s t r o p h e L o s s e s

Underlying earnings per share

U n d e r l y i n g E P S = \frac{U n d e r l y i n g E a r n i n g s}{W e i g h t e d A v e r a g e S h a r e s O u t s t a n d i n g}

V

VFA: Variable Fee Approach
Used for insurance contracts with direct participation features (e.g., unit-linked or with-profits policies).

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Insurance Glossary

A

B

C

E

F

G

L

M

N

O

P

R

S

T

U

V

References