This course introduces you to the Risk-Based Capital (RBC) concept and the application of the RBC requirement to life insurance companies. This self-study module starts with a review of the RBC report and formula, followed by a detailed discourse on each of the RBC risk elements. The course concludes with a discussion of the calculation of Life Risk-Based Capital, the RBC ratio, and compliance with the RBC model law.

Prerequisites/Advanced Preparation: None

Learning Objectives:

• Identify the purpose, goals, and benefits of Risk-Based Capital
• Identify the characteristics of the Risk-Based Capital categories
• Identify how the total RBC requirement is calculated
• Differentiate between the four RBC action levels

Outline:

• History of RBC
• RBC Concept
• RBC Report
• RBC Formula
• RBC Risk Elements
  • Affiliate & Off-balance Sheet Risk
  • Asset Risks
  • Insurance Risks
  • Interest Rate Risks
  • Business Risks
• Calculation of Total RBC
• The RBC Ratio
• Compliance with RBC Laws
• Summary