This paper explores an approach to assessing the adequacy of capital resources for non-life insurance companies. It examines the range of risks faced by these companies and the factors that influence the analysis of their impact on an organisation's financial condition. The paper considers how the actuarial profession may contribute to this process, with particular reference to the regulatory regime envisaged in the United Kingdom.

General insurance syndicates at Lloyd's are required to obtain a Statement of Actuarial Opinion (SAO) in relation to their solvency reserves. This paper focuses on the reinsurance to close (RITC) process at Lloyd's, which is not currently subject to such opinions, although some Lloyd's syndicates choose to obtain informal opinions from actuaries in relation to RITC. The paper analyses the current RITC process and suggests two types of opinion that actuaries could provide in relation to RITC. We also consider briefly financial condition opinions for Lloyd's syndicates. The International Accounting Standards Committee (IASC) published their issues paper on insurance accounting during the drafting of this paper, and we include some consideration of the application of the IASC's fair value concept to the future claim liabilities of Lloyd's syndicates. Lloyd's may be subject to unprecedented changes in the next few years, and we therefore consider the effect of these potential changes both on the existing actuarial solvency opinions and on our suggested opinions in relation to RITC. Our aim is to carry out an objective analysis of this unique reserving process and to offer suggestions as to how actuaries might add value to the process, taking into account how Lloyd's might change in future. Because of these changes, much of the paper has direct application to non-Lloyd'