Glossary

Guoqiang Li

Adverse development cover (ADC). A type of reinsurance treaty that is retrospective in nature and is used to manage the risk associated with in-force reserves. It is an excess of loss cover attaching at or above the carried reserve level. See also loss portfolio transfer (LPT).

Aggregate exceedance probability (AEP). The probability that the sum of all the losses in a year exceeds a certain amount; used in connection with the probable maximum loss (PML) in catastrophe risk measurement. See also occurrence exceedance probability (OEP).

Available economic capital (AEC). A concept in the economic capital model that measures the available capital; the net asset value of the economic balance sheet (ie, the difference between the fair value of assets and the fair value of liabilities). See also economic balance sheet (EBS).

Average annual loss (AAL). Used in catastrophe risk measurement; the mean or expected insured losses from all catastrophe events that occur in any given year. See also probable maximum loss (PML).

Basel Committee on Banking Supervision (BCBS). The primary global standard-setter for the prudential regulation of banks; provides a forum for cooperation on banking supervisory