The author focuses on the relative emphasis that the structure of regulatory capital places on formulas and on supervision. The two are not viewed as mutually exclusive, but as elements to which capital policy implicitly assigns relative weights. He shows that in U.S. regulatory practice, these...

The author provides a few practical comments on capital adequacy from an insurance company perspective. In doing so, he presents two views on capital adequacy and capital allocation in the insurance industry. The first view is the regulatory perspective, that is, the motivations behind...

In this paper, the authors consider how risk measures, based on internal models of this type, might be integrated into a firm's own methodology for allocating risk capital to its individual business units and for determining its optimal capital structure. They also consider the implications of...