What is Risk Adjusted Capital Ratio (RACR)?
What Does RACR Ratio Mean for Your Structured Settlement Annuity Company?
What is the Risk-Adjusted Capital Ratio?
The Risk-Adjusted Capital Ratio (RACR) is a measure of resilience, a financial metric used to gauge a financial institution's ability to continue functioning in the event of an economic downturn. It is calculated by dividing a financial institution's total adjusted capital by its risk-weighted assets (RWA). RACR provides a nuanced view of capital adequacy by factoring in risk, making it a valuable complement to other capital ratios. Financial institutions use a combination of these ratios to assess their financial stability and regulatory compliance
Two variations of the Risk-Adjusted Capital Ratio
- RACR #1: This ratio considers the insurer’s capital in relation to its risk exposure. A higher RACR #1 indicates better capital adequacy.
- RACR #2: Similar to RACR #1, this ratio also evaluates capital adequacy but may use a different methodology or risk assessment. Again, a higher RACR #2 is preferable.
Weiss Ratings Uses Risk-Adjusted Capital Ratio in its analysis of life insurance companies, including life insurance companies that issue structured settlement annuities
Examples
Pacific Life Insurance Company
Newport Beach, CA
Weiss Rating A
Rating Date: December 2023
NAIC Classification" Life & Annuity
Risk Adjusted Capital Ratio #1 3.42
Risk Adjusted Capital Ratio #2 1.85
Total Assets $178.80B
Capital $11.70B
Net Premiums $14.30B
Net Income $151.30M
USAA Life Insurance Company
San Antonio TX
Weiss Rating B+
Rating Date December 2023
NAIC Classification Life & Annuity
Risk Adjusted Capital Ratio #1 4.11
Risk Adjusted Capital Ratio #2 2.15
Total Assets $27.77B
Capital $2.64B
Net Premiums $2.05B
Net Income $52.25M
Source: WeissRatings.com
Difference Between Risk Adjusted Capital Ratio (RACR) and RBC Ratio?
RBC is a broader regulatory framework, while the risk-adjusted capital ratio specifically assesses an institution’s ability to withstand economic risks. Both place crucial roles in assessing fiancial security.
What is Risk Based Capital? (4structures.com)
4structures.com, LLC
The Structured Settlements and Settlement Planning Company
43 Harbor Drive, #309 Stamford, CT 06902 USA
888-325-8640
646-849-1588
New York City (Manhattan, Bronx, Brooklyn, Queens, Staten Island), Westchester(NY), Nassau County (NY) , Suffolk County on Long Island (NY), Albany County (NY), Oswego County (NY), Steuben County (NY), Broome County (NY), Onondaga County (NY), Monroe County (NY), Fairfield County (CT), New Haven County (CT), Hartford County (CT) New London County (CT), Tolland County (CT), Litchfield (CT), Middlesex (CT) , Bergen County (NJ), Middlesex County (NJ), Ocean County (NJ)
Structured Settlement Experts and Settlement Planning Consultants for settlements from claims or lawsuits arising out of Aviation accidents, Medical Malpractice, settlements involving Serious Personal Injury, Wrongful Death, Wrongful Incarceration, Employment, Civil Rights, Discrimination of any type, Auto accidents, Motorcycle accidents, Maritime accidents, Workers' Compensation, Product Liability, Real Estate Liability, Construction Defect claims or lawsuits, Landlord/Tenant,
Property, Attorney Fee Deferrals, Funding Agreements, Structured Installment Sales, Environmental Liability and Commercial Dispute settlements.
Structured settlements and structured settlement brokerage, settlement planning, Sudden Money®, financial transitionist, funding agreements and insurance related services provided by 4structures.com LLC.
Financial Advisory Services provided through Groove Financial Advisors , LLC, and its service partners.
Fiduciary services, including the custody and administration of trusts provided via service partners.
Securities and Insurance Products are NOT Insured by the FDIC, nor by any other Federal or State Government Agency, are NOT a Deposit of and are NOT Guaranteed by a Bank or any Bank Affiliate, and securities MAY lose value.
4structures (USPTO Reg. 4640532) , 4structures.com (USPTO Reg. 4640531) , We Know Structured Settlements (USPTO Reg. 3089738),
Because Certain Sells (USPTO Reg. 6237309) and We Know Structured Sales (USPTO Reg. 3490489), are Registered Trademarks of 4structures.com LLC.
John Darer is a Registered Trademark of John Darer (USPTO Reg. 4674907)
John Darer California insurance license 0761076
4structures.com LLC CA license OF19785 d/b/a 4structures Settlement Insurance Agency
Copyright ©2024 4structures.com LLC
All rights reserved.
