What does solvency require of an insurer?

Solvency is a critical concept in the insurance industry, referring to an insurer's ability to meet its long-term financial obligations. It primarily requires having sufficient assets to cover liabilities. This means that the insurer should possess enough financial resources to pay out claims and fulfill other financial commitments. This foundational principle ensures that insurers can remain operational and provide the promised coverage to policyholders.

While having a high level of paid-in capital contributes to an insurer's financial stability and can be a component of solvency, it alone does not fully encapsulate what solvency requires. Similarly, being able to repay policyholders directly is important but is a narrower aspect of the broader requirement to maintain sufficient overall financial health.

Given this understanding, choosing "all of these" recognizes that solvency encompasses a comprehensive view, including adequate asset management, maintaining capital levels, and fulfilling obligations to policyholders. Each of these factors plays a vital role in ensuring that an insurer remains viable and capable of executing its responsibilities toward its clients.